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Used automobile sales up 5% but prices remain at record-high levels

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Almost 1.8million used cars modified hands in the primary three months of 2022, a year-on-year rise of 5 per cent, in keeping with figures published this morning.

Demand for second-hand motors stays exceptionally high due to restricted recent automobile production linked to the worldwide semiconductor shortage and ongoing supply crunch that has been hammering the sector for 2 years.

Growing waiting lists for brand new motors has sparked a rise in motorists switching to the used automobile market, which has triggered values of second-hand vehicles to skyrocket, with the common price almost a 3rd above what it was just 12 months ago.

Used automobile demand still going strong: Sales of second-hand motors were up 5% year-on-year within the opening three months of the 12 months, in keeping with recent data from the automotive trade body

Some 1,774,351 second-hand automobile transactions took place in January, February and March, the Society of Motor Manufacturers and Traders said on Tuesday.

A further 86,596 cars modified hands compared with the identical period a 12 months ago, though it must be noted that automobile showrooms nationwide were closed for much of the primary quarter of 2021 as a consequence of pandemic-related lockdowns and only ‘click and collect’ sales were allowed.

Despite growth over the primary three months of the 12 months, used motor transactions remain 12.2 per cent below the pre-pandemic 12 months of 2019.

Nevertheless, electric cars bucked the trend with one other record quarter.

Sales of used pure electric vehicles greater than doubled from 6,625 to 14,586 – an increase of 120.2 per cent – though they still only made up 3.6 per cent of all transactions.

Plug-in hybrids and traditional hybrid cars also modified hands in greater numbers than the 12 months before, rising by 35.3 per cent and 28.8 per cent respectively, but petrols and diesels still account for greater than 19 in 20 second-hand motor sales.

The expansion of the used market is a complete contrast to the brand new automobile market, with registrations down 34.1 per cent over the identical period as vehicle production proceed to be restricted by a shortage of semiconductors and wider supply issues.

Mike Hawes, chief executive on the SMMT, said the expansion within the used automobile market ‘is welcome’ in light of the continuing supply crunch strangling manufacturers, but said it was ‘unsurprising given we were in lockdown last 12 months’. 

Richard Peberdy, head of automotive at KPMG, added: ‘The increasing cost of living is cooling the used automobile market barely, but demand still stays high and is prone to proceed to until the problems impacting recent automobile production are resolved and more supply enters the used automobile market. That’s unlikely to be this 12 months.’

The average price of a used car in April was £17,418 - that's almost a third higher than the same month of 2021, says Auto Trader

The common price of a used automobile in April was £17,418 – that is almost a 3rd higher than the identical month of 2021, says Auto Trader

Have record second-hand automobile prices hit a ceiling?

Latest data from the Auto Trader claims that average used automobile values in April were 32.2 per cent higher than a 12 months ago, marking a twenty fifth consecutive month of rising prices.

The common price of a used automobile in April was £17,418, based on the advertised prices of around 900,000 vehicles listed on the web site. 

Nevertheless, it says it’s starting to see signs of growth levelling off, with only a marginal increase on the 32 per cent year-on-year rise recorded in March, which may very well be a signal of the market hitting a ceiling.

It said the slight deceleration in average used prices ‘is the results of a variety of aspects, not least the incontrovertible fact that growth is now overlapping last 12 months’s already very strong levels’.

The second-hand automobile marketplace added that softening consumer demand fuelled by the associated fee of living crisis has also had an impact on demand, which in turn has seen values soften as dealers look to draw customers.

But while record second-hand prices might possibly be flat-lining, Auto Trader says there isn’t a indication in the info that prices will back down. 

It is because the semiconductor shortage – which triggered used automobile values to sky-rocket – continues to affect manufacturers, who at the moment are being constrained by additional issues, not least the provision of components from Russia and Ukraine and the slowdown within the Asian market.

Commenting on April’s performance, Richard Walker, Auto Trader’s director of information and insights, said: ‘Clearly there’s potential economic headwinds to consumer demand, but from what we’re seeing, there’s still robust levels of appetite for each recent and used cars out there. 

‘Add to the incontrovertible fact that the continuing squeeze in recent automobile supply is prone to be prolonged, due partially to the present geo-political situation, we’re confident used automobile prices will remain strong for quite a while to come back.’

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