Despite a big reduction in driving during the pandemic, many motor traders have enjoyed a huge comeback for second-hand car sales. The Society of Motor Manufacturers and Traders (SMMT) reported that in Q2 of 2021 alone, used car sales increased by 108%: a growth of 6.6% on the pre-pandemic figures for 2019.
Why have used car sales and prices climbed so much? One of the main reasons is the global shortage of semiconductor chips. These chips are used in many of our electrical products, from microwaves to laptops – not to mention new cars. However, the pandemic forced many of these microchip factories to temporarily shut down. At the same time, demand for gaming consoles and laptops increased as more people stayed at home, leading manufacturers to divert the supply of chips away from new cars towards the consumer electronics industry.
As a result, new cars are in short supply and are forecasted to stay that way in the first half of 2022. Registrations plummeted to only 1.63 million in 2020 compared to 2.31 million in 2019, in what the SMMT described as the ‘toughest year for the market since 1992.’ Likewise, waiting lists for new cars are still over 12 months long in some cases. This led to a huge rise in sales of older used cars throughout 2021, with only 12.7% of all vehicles sold having been made within the last three years, the lowest number on record.
While the cost of used cars has increased, the process of buying and insuring a second-hand car is still financially preferable for many. So, whether you’re looking at the very cheapest used cars to insure or finding the ideal car for a little cheaper than you’d pay for it new, there is still much to be gained from the used car market.
Tradesure representative Matthew Liscott stated that: ‘We’ve seen a huge rise in second-hand car sales throughout 2021, which is great news for a lot of used car motor trade businesses – both big and small. The value of used cars is still on the rise, with a year-on-year increase of 25.6% recorded in October 2021.
‘With the semiconductor shortage expected to carry on through 2022, we’re hopeful that the used car motor traders can enjoy some price stability in the first 6 months of the year, although we do urge used car dealerships to keep an eye on industry values when it comes to pricing their stock.’
All-time high for electric car sales
Electric vehicle (EV) sales were also at an all-time high during 2020. We saw sales figures for battery EVs almost tripled, while plug-in EV sales doubled in a ‘combined market share of 10.7%’, likewise non-plug-in hybrids accounted for 18%.
When it comes to electric car insurance cost in the UK, we’re not yet at the point where electric cars are cheaper to insure. This is partly due to insurers still getting to know the costs involved with repairing electric cars, and partly due to the fact that most of the electric vehicles currently available are at the higher end of the market.
That said, not only is electric vehicle insurance becoming increasingly affordable as more electric vehicle models become available, but when you consider all the other savings related to road tax exemptions and reduced fuel costs, the move is starting to offer economic appeal in addition to environmental.
Check out our infographic below which takes a look at the key stats around the rise of second-hand car sales in the UK.
To read more about how the Covid-19 pandemic has affected our driving habits and the motor trade, visit our main information page here.