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It used to hold that only classic cars were an investment, but now the same is true if you own a Ford Focus.
Shifting secondhand motors is now a “nice little earner” as Cockney wheeler dealer Arthur Daley would have put it in the TV show Minder, with prices surging 30% in the past year thanks to the ongoing shortage of computer chips stalling new car production, according to figures from the website Motorway.
And last month one in six nearly new cars (aged up to 12 months old) were priced higher than the brand-new version, separate data from the Auto Trader marketplace shows.
The traditional rules of motoring, including that a car starts to shed value as soon as you drive home from the dealership, no longer hold true as the supply of new cars dries up, said Motorway’s chief executive Tom Leathes. “The numbers are massively reduced,” he said. “The biggest reason is the chip shortage, which means it is very difficult for car makers to manufacture in any volume, so there are huge waiting lists.”
As a result the Motorway data shows big rises in the secondhand value of popular models such as the Ford Focus. Last month the average Focus, as driven by Microsoft founder Bill Gates and singer Lily Allen, sold for £13,309 on the site, which is £3,346 – or 34% – more than a year ago. The value of a Nissan Qashqai, another family choice, had risen by nearly a quarter, to £11,525.
Last week data from the Office for National Statistics showed that used car prices were up by more than a fifth since April, stoking inflation at a time when many Britons are worried about their household finances.
The increased cost of buying a car is not the only pressure facing motorists as, in the wake of panic buying that emptied the country’s forecourts, fuel prices are close to record highs.
Leathes said the shortage of new cars meant people who would normally buy brand new were opting for secondhand, adding: “That means there’s more demand on used cars than ever before, and there’s less of them, particularly the nearly new stuff, so that’s causing prices to go up significantly. We’re in unprecedented times – a used car is typically a depreciating asset.”
The squeeze is highlighted by industry data that shows the collapse in new car sales. Just 215,000 new cars were registered last month, the lowest figure since 1998. The numbers were a third down even on a weak 2020, when Covid restrictions hindered buying and selling, and down almost 45% on the 10-year average before the pandemic.
With secondhand prices soaring, Auto Trader figures show that in September one in six nearly new cars cost more than the new version.
The industry’s ruptured supply chain means the average waiting time for a new car is between four and six months, but is up to 12 months for models such as the Land Rover Discovery Sport. Last week Jaguar Land Rover’s Halewood factory on Merseyside was forced to temporarily close because of the chip shortage.
“There have always been more than 100,000 cars in the UK at any moment that consumers could get hold of with virtually immediate delivery,” explained Ian Plummer, Auto Trader’s commercial director. “No one has a good take on what that number is now, but based on the evolution of available new cars on Auto Trader over the last six months or so, it’s probably come down two-thirds.”
Demand is high as consumers look to buy or upgrade their vehicle using money saved during the lockdowns, or as they switch away from public transport to get to work.
“I don’t think many people in the industry thought a 12-month-old car would ever be sold at a higher price than the new equivalent,” said Plummer, who added that the rate of secondhand price growth was still accelerating. Figures for the week before last show the average price of a used car was 23.9% higher than a year ago, with Plummer adding: “At some point it has to start bottoming out but at the moment the fundamental drivers of the situation are nothing more than simple economics.”