INVESTIGATION
COULD CRISIS IN NEW CAR MARKET SUPERCHARGE USED CAR PRICES? James Baggott chats to industry experts about how the global shortage of semiconductors may be bad news for some but it could be welcomed by others.
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2% emiconductor chip shortages may be bad news for the new 0.3% car market but they are set to supercharge the used car 1.5% market and push prices up even further. 1% A Car Dealer investigation has found that while the 0.4% 0.5% impact that the lack of the microchips is having on 0.3% 0.4% 0.2% 0.3% 0% new car supply is severe, it is set to boil an already-bubbling 0% used car industry. -0.5% What Car? says it has already heard from buyers who can’t get the -1% new car they want turning their attention to used cars instead. A combination of increased used car demand and lack of supply -1.5% -1.4% -1.4% -1.5% – mostly due to dampened new car sales reducing the number of -2% part-exchanges – has already seen used prices hit unprecedented -2.1% -2.5% heights in 2021. -3% Now experts from the valuation, auction and used car advertising -3% worlds all predict the semiconductor issue could push used car prices up even higher. Jim Holder, editorial director of What Car? said: ‘We are hearing Source: Solera | cap hpi about the nearly new market hotting up. ‘Our weekly polling of car buyers tells us that demand is strong, and that buyers who can’t get the car they want are willing to either buy nearly new or swap to models or brands with availability at increasingly high rates.’ Derren Martin, head of valuations for Cap HPI, said showrooms were likely to see used car prices rise by as much as five per cent. ‘As always, when supply is constrained and demand strong, prices increase. ‘With new car availability an issue over the coming weeks and months, consumers may well switch to used cars, and there is lower supply than normal, due to the pandemic’s impact last year. ‘With demand likely to outstrip supply, values are likely to stay strong over the summer months. ‘April and May are likely to see total average rises of around five per cent.’ Since the April 12 reopening of showrooms, used car demand has been very high and dealers are already struggling to replenish stock at sensible prices. Martin said that lower-than-normal new car registrations in March and April had impacted on part-exchanges and fewer fleet returns had worked their way into auction halls. Rupert Pontin, director of insights at Cazana, which is another used car valuations firm, Derren Martin said that new car supply issues caused by the semiconductor constraints would really set in during the second half of the year.
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Car valuations – percentage movements in the past 12 months
With new car availability an issue over the coming weeks and months, consumers may well switch to used cars.
14 | CarDealerMag.co.uk
