Auto Trader's Commercial Director, Ian Plummer, offers his view on the latest used car sales data from the SMMT
The used car market saw a huge increase in consumer demand last year, fuelled in part by the growing number of people who believe owning a car is more important than it was pre-COVID, and the one in ten planning on buying a new car to avoid public transport. On our marketplace, traffic was up nearly 30% on 2019, with monthly visits surging to around 64 million.
“It’s easy to forget that physical forecourts were closed for over three months last year and just as the market returned to some semblance of normality, the world-wide supply shortage of semi-conductors hit new car supply very hard and with quick and deep knock on effects on the used car market. Even with increased demand, such a strong performance is remarkable.
“I have no doubt 2021 will be remembered as a defining year for the used car market as we saw the steps it was forced to take to embrace digital solutions pay off in a big way. By the closing weeks of the lockdown, retailers were often hitting around 90% of normal sales volumes.
“The sharp hit to new car sales and chip shortages caused prices to rocket, with five years’ worth of growth squeezed into just seven months. With new car supply challenges set to last until at least the middle of the year, the effects will be felt for the next few years as younger vehicles become increasingly scarce. We think the pandemic resulted in 1.5 million lost new car sales. There are already a third fewer sub three-year-old used cars available to buy this year than there were in 2019. With no sign of demand levels easing, price growth won’t be slowing significantly anytime soon and we may have to get used to our cars as appreciating assets.
“The surge in electric vehicles is promising, and on our marketplace used EVs are now selling faster than any other fuel type. However, EVs still represent just a tiny fraction of the market, as very high prices and anxieties about battery degradation continue to limit even the second-hand EV market to all but the wealthiest car buyer. The government has admirable targets, but it’s hard to see how they can be met when it is reducing incentives and even raising the prospect of a road use tax for EV drivers.
As we saw with the flip-flopping on diesel policy, the result is confusion and inaction on the part of car buyers. We urge the government to learn the lessons of the past and not put the cart before the horse.”
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