INVESTIGATION
USED CAR PRICES WHY THEY WENT UP WILL IT CONTINUE?
Soaring used car prices have been a strange quirk of the pandemic – but for how long will these used car values remain high? Is there a used car price crash around the corner? Editor-in-chief James Baggott investigates.
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ust as day follows night, the rule in the car world has always been that new vehicles lose money the minute you drive them off the forecourt. Everyone knows you pay a premium to drive around in a new car with the latest registration but that it’ll lose money until the day you come to sell it. That was until the pandemic turned all that on its head. A swirl of market forces combined to spin the impossible around, and since Covid-19 arrived on the scene we’ve actually witnessed used car prices grow. And we’re not just talking single digits here. Since the start of 2021, used car prices have risen by nearly 30 per cent, with some models rising by as much as 70 per cent. But what caused this strange phenomenon? What was the catalyst that turned the used car market on its head and, importantly, for how long can high used car prices remain?
WHY DID USED CAR PRICES GO UP?
At the sharp end of used car pricing throughout the pandemic was Derren Martin, recently promoted to director of valuations at trade pricing firm Cap HPI. He takes us back to March 2020 and the start of the pandemic when the first lockdown forced car dealers to close their doors. During that time, few car sales were being made and there was confusion as to whether doing deals was even allowed. For 10 weeks, as the country hid inside watching Netflix, used car transactions plummeted. ‘The used car retail market hit the ground running from day one of reopening after lockdown, if not before,’ explained Martin. ‘There was immediate pent-up demand from consumers that had been wanting or needing to buy during the lockdown period, plus those that were by then reluctant to travel on public transport.’ The start of a new used car world order had begun. 10 | CarDealerMag.co.uk
The used car retail market hit the ground running from day one of reopening after lockdown, if not before. Derren Martin Cap HPI
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