From today's Telegraph:
Car production slump boosts second-hand motor market
The value of the average three-year-old car jumped £477 during August
By Alan Tovey, Industry Editor 29 August 2021 • 4:30pm
Second-hand car prices have risen for an unprecedented sixth consecutive month after automotive factory production plunged to a 65-year low.
The value of the average three-year-old car jumped £477 during August, a 3.7pc rise, according to data from Cap HPI, the body the industry relies on the track pricing.
Drivers have more money to splash out on a used car this year given the ongoing restrictions on foreign holidays, as well as savings built up during lockdown.
Derren Martin, Cap HPI’s head of valuations, described the increases as “extraordinary”, saying the market was “on steroids, crazy”. He added: “Vehicles have increased, on average, by more than one-fifth of their value in less than half a year. In normal times, they would have depreciated by 5pc during this period, so a swing of over 25pc has occurred.”
Vauxhall Zafira
The price of a three-year-old Vauxhall Zafira has gone up 41.5pc, or £3,575 Credit: Philip Hollis
The reversal of normal trends in second-hand cars has been caused by a unique set of circumstances – and is not likely to let up for several months.
A global shortage of semiconductors vital to car production means manufacturers have had to cut the number of new cars rolling off production lines, meaning more people are turning to the used car market.
Car makers are focusing supplies of semiconductors that they can secure on their most profitable – and usually most expensive – models, putting off less well-heeled motorists from buying a new vehicle and steering them to look for used alternatives. Forecasters are predicting that the supply squeeze could last well into 2022.
UK vehicle production is at record lows
Bar chart with 2 data series.
Recovery of car manufacturing industry has been affected by global chip shortage
The chart has 1 X axis displaying categories.
The chart has 1 Y axis displaying Units produced. Range: 0 to 150000.
End of interactive chart.
The situation has been exacerbated for UK-built cars, as the “pingdemic” slowed down output as car makers and their suppliers suffered staff shortages.
This drove down the number of cars rolling out of UK factories in July to its lowest level since 1956.
Just 53,438 cars were built in the month, down almost 40pc on a year ago, according to figures from the Society of Motor Manufacturers and Traders. Although car production so far this year is almost a fifth higher than during 2020 at 552,361 vehicles, it is still down almost 30pc on pre-pandemic levels.
Faced with a limited range cars available and delivery waits which are much longer than normal, drivers have increasingly been scouring used car market.
Mr Martin said some surprising vehicles at the three-year mark have posted the biggest price rises. While “toys” such as used Mazda MX-5 sports cars rose 45.8pc – some £5,250 – over the past six months as drivers sought fun outlets, he was was shocked to see Mercedes V Class people movers rise by 44pc or £11,000, and Vauxhall Zafira go up 41.5pc or £3,575.
