Used Car Prices in 2022 To Stay Much The Same Way As Last Year
Used Car Prices in 2022 To Stay Much The Same Way As Last Year
The values of secondhand cars may not dip considerably this year, as the new car supply is still low.
This statement comes fromone of Auto Trader’s directors, Catherine Faiers, who recently talked to Car Dealers Magazine.
Faiers pointed out that all the things that drove up the secondhand vehicle prices to record levels last year are still dominant. Therefore, it is improbable we could see any decrease in values.
Auto Trader's recent survey suggests that the average secondhand vehicle values in January 2022 went up by 31.3 per cent in comparison to January 2021.
Astonishingly, the industry has witnessed a price increase for the 22nd consecutive month in January owing to the high demand and low supply.
The data analysis shows the average value of up to a 3-year-old diesel SUV improved from £31k to £42k. On the other hand, a 3 to 5 years old petrol hatchback went up from £8k to £13k.
“We think it is going to go on for now,” Faiers mentioned. “All of those demands are still there in some way. All of the consumer data suggests that consumers care more about owning a car.”
“Affordability is still tracking very strongly despite concerns over real wage growth, or lack of real wage growth in the last few months. Demand looks robust and set to continue, and we still haven't caught up anywhere near to the 1.5m transactions that were lost during the pandemic.”
Faiers mentioned clearly that the slow manufacturing due to the shortage of semiconductors is still causing an increase in the used car’s prices.
“The big question and the big unknown is the supply side, and quickly the new car market comes back. There’s nothing that we are hearing in H1 that suggests there is going to be any big step change in new car supply,” she added.
Some automakers are working to improve the manufacturing volume, but that is a small increment, and Faiers expect the situation will persist in H1 and may get better in H2.
“But most of the manufacturers we are talking to are saying it will be 2023 before volumes look anything like what they would consider being normal. Certainly, for 2022, the used car market will look a lot like it did last year,” Faiers said.
Will we see price growth for new cars?
The Auto Trader director also believes the production woes may also drive up the prices of new vehicles.
“We think new car prices will have to adjust,” stated Faiers.
“We have one in five nearly new cars that are less than a year old currently priced ahead of their new equivalents. When you look at commodity prices for manufacturers, I think we are going to see – and should expect – manufacturer recommended retail prices for the cars coming to market to go up.”
It is not just happening due to the additional manufacturing of the EVs but also higher unit expenses.
While answering a question regarding higher bills for car dealers in 2022, Faiers said, “We’ve grown market share and delivered more value to our customers than any other year. Each year we do review our packages and products, and we have done the same thing this year.”
Faiers told the presenter during the Car Dealers Podcast that their new ‘Connect’ product is revolutionary.
“We will look at product and package mix as we always do, but we are confident more than ever that the value we are delivering to our customers is more than it has ever been,” she added.
Article Source: Car Dealer Magazine
Image Source: WTVM