Why are used cars so expensive now?

Prices for used cars have skyrocketed recently, and it's no secret to consumers interested in buying a used car. Auto Trader reported that it had seen a 31 per cent spike in the price of used vehicles listed on its website compared to a year ago, while rival online sales platform CarGurus said it has tracked values increasing 26.3 percent over the same period. But why is this?

Supply and demand issues

The Covid-19 pandemic had a big impact on the new car market, which has left buyers to resort to only one other avenue - the used car market. Demand for new cars stayed the same, but supply decreased, making used car prices go up as these were the only other options. 

The supply of used cars also went down, as with everyone having to stay at home, part exchanges and trade-ins were happening less. This is where the majority of used cars come from, so this lack of supply also boosted prices.

Chip shortages

Newer cars took longer to build in Covid-19 due to a lack of microchips that needed to be added.

Chips suppliers had to shut down their businesses during the pandemic as they weren’t considered essential workers, and according to Consumer Reports, this resulted in a shortage of an estimated 8 million vehicles in 2021.

Car rentals are becoming more popular

Car leasing/renting is slowly becoming more popular, however during the pandemic car rental businesses were unable to buy new cars because of the new car shortage. As such, they are resorting to buying used cars, which is further pushing the prices up as the demand is so high.

Will the situation improve?

It’s estimated we’ll have to wait until around 2023 to see a noticeable change. The supply chains for the automotive sector have to catch up with demand from the car manufacturers so they can speed up production of their cars. However, inflation also plays a crucial part.

This could work in buyers favours though, as demand could come down considerably. Another advantage is also that you can expect to see yourself getting a much better price for your car now if you wanted to sell it.

At Complete Car Buyers, we’re interested in buying any car, regardless of the make or model. Our links to the motor trade means we can give more competitive prices than other car buying sites and we promise we’ll beat any like for like quote.

Get a free online no obligation quote today if you’re looking to sell your car, or you can call us if you’d prefer.