What should used car dealerships expect in 2022?

05 Nov, 2021

With 2022 just around the corner, there are a few things to keep going into next year. From the massive spike in prices to the new car shortage, there have been a few ups and down to say the least. It looks as though 2022 will still be feeling the effects of a lot of this year’s issues. We take a look at what the used car industry can expect for next year and give you a few tips on how to stay ahead of the curve.

What will happen to used car prices in the first 6 months of 2022?

There are some mixed opinions on how the used car industry will look over the first half of 2022.

On one hand, prices have been rising so quickly that some industry experts are predicting an ‘automotive mini recession’ in the new year which will see current prices drop dramatically.

On the other hand, plenty of experts are predicting that prices will remain high given the struggles that the new car industry will still be having. Derren Martin, Cap HPI’s head of valuations, said used car prices still rose 1.2% in October, but this was lower than the 5.6% rise in September, so prices might be starting to level out.

However, Martin agrees that the used car industry can make the most of higher prices in 2022:

‘I think we’ve got some stability for a while. If values drop then there is no reason to panic – they’ve gone up by 30 per cent. They are going to come down at some point, but I can’t see it coming down in big chunks. I think it will be relatively stable which again I think is good and a positive sign. My personal opinion is we’ve got it for at least the first half of next year.’

It’s important to keep up with average used car prices throughout 2022, as no matter what happens, we’re sure to see some price changes. Keep in mind that overpricing used cars will have the usual downfall of customers buying elsewhere, but the same goes for pricing cars too low, which was an issue for a few of used car dealers throughout summer 2021.

Some dealers with websites are using automatic price adjusters so they can stay on top of changes. Your best bet is to keep an eye on the wider industry and adjust your prices to reflect the market.

Will the semiconductor chip shortage continue into 2022?

The semiconductor shortage was predicted to happen as early as February 2020. It’s a big problem, as these chips are used in everything from alarm clocks and toothbrushes to microwaves and mobile phones – not to mention new cars.

Since COVID hit, countries all over the world have struggled to keep up with demand and supply. Semiconductor plants had to be shut down during lockdowns, and when they were open workers couldn’t operate at full capacity, which slowed down production. The shortage was made worse by a higher number of people staying at home and buying more electronic gaming devices, new laptops and the like.

Where it really affects the used car industry is the shortage of new cars. The UK have produced roughly 100,000 fewer new cars this year, according to the Society of Motor Manufacturers and Traders (SMMT). Compared to figures in 2020 when factories were closed, production is only 14% higher this year. There are more shocking statistics, too: new cars sales are actually down 44.7% compared to the ten-year average, while the new car sales from September 2021 hadn’t been as low since September 1998.

The shortage is expected to continue into 2022, too. Chief Executive of the SMMT Mike Hawes said: ‘Carmakers and their suppliers are battling to keep production lines rolling with constraints expected to continue well into 2022 and possibly beyond.’ It seems like new cars won’t be flying off the production line anytime soon.

This is good news for the used car market, as again, it means demand for used cars will probably remain high in the first half of next year. Hopefully small used car dealerships can enjoy higher prices for a long while yet!


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