Are used car prices going up in 2021?
Despite an understandably slow start for the car industry in 2021, the second half of the year is looking particularly promising for both individual sellers and used car dealers. Having remained reasonably active despite the impact of a national lockdown, used car sales are now soaring and leading the wider car market’s recovery charge.
There is, however, one big question that naturally comes with higher demand in the market. That is: are used car prices going up alongside the increased sales numbers? We’ve put together a quick guide that explains where prices are in the market right now, why that is and what that means for you as a potential buyer or seller.
Is the price of used cars going up?
Yes, used car prices are going up right now, and quite significantly too.
In July the used car market recorded its fifth consecutive month of price increases, with a 16.6% rise in rates since April. This considerable surge in price comes as part of a record-breaking second quarter of sales in 2021, with the 2.17 million vehicles changing hands between April and June representing a 108.6% increase on this time last year and a 6.6% boost on pre-pandemic levels in 2019.
The global chip shortage
The recent acceleration in both sales and prices boils down to supply and demand issues. While there is undoubtedly a pent-up demand for used cars, much of the current market situation is a result of a significant lack of new cars being produced at a time when lockdown restrictions are lifting and consumers are looking to increase their mobility again.
Why are there no new cars at a time when demand is high? The problem lies in a lack of parts, more specifically a global shortage of microchips, which are key to new car builds. At the beginning of the pandemic, many car manufacturers cancelled large orders of microchips in anticipation of slowed sales through the crisis. While a reasonable move at the time, this has caused a major supply issue in light of the current, unanticipated sales surge, with microchip producers having diverted their supply to the consumer electronics market.
It’s an interesting and highly important feature in the current car industry picture, and until microchip producers can get back up to speed and meet the demands of various key global industries, it’s likely demand in the used car space will also stay high.
Used car prices are also going up in the EV and hybrid market, where Q2 of 2021 saw electric and hybrid sales triple. Used EV and PHEV sales still only make up 1.3% of the total used car market, however, with uptake still yet to enjoy the same acceleration as seen in the new car sector of recent.
This shouldn’t be too much of a concern, though, as a recent survey from Admiral Insurance found that 52% of British consumers are interested in getting a second-hand EV, with 55% intending to switch to a used electric car within the next five years.
What does this mean for used car owners?
With used car prices so high, and seemingly set to remain high for the foreseeable future, what should individual buyers and sellers do in the current climate?
For those looking to sell or part-exchange their car, there couldn’t be a better time to do so. With prices and demand so high, sellers should be able to find a good price for their car quickly and easily, making any sale or trade-in a largely stress-free process. For those looking for a valuation on their vehicle, our free car valuation tool can give you a price on your car in a matter of minutes, so you can see where you stand in the current market.
As for buyers, the used car market may not be looking as attractive as it could for the time being. However, those using their current car to part-exchange can counterbalance any deal to get a decent price on their new vehicle. Those looking to make an outright purchase may wish to hold off until things ‘die down’, but with supply and demand issues still prominent in the market, who knows when that will be.
Get a great price on your car today with Robins & Day
Is the price of used cars going up right now? Yes. Can we still help you find a great deal on your next car? Yes.
Whether you’re looking to sell, part-exchange or buy outright, we’ll always keep our prices fair and competitive to current market rates. Our valuation tool is a good place to start if you've got a car you’re looking to move on, but you can always contact us to find out more about our current offers or visit your local Robins & Day dealer today.