Why Has Used Car Prices Surged?

First Flexi Lease Look At Car Shortages Affecting Prices After Lockdown

The coronavirus pandemic and subsequent lockdowns disrupted car manufacturing globally, leading to a boom in high quality used cars throughout the UK. According to Autocar, figures from SMMT reveal ‘best ever second quarter’ for the used car market, with two million one hundred and sixty seven thousand five hundred and four models sold! An increase of 108.65%

Today we look at this in detail, consider the variables and changes to consumers lives which has led to this sudden increase in value for used cars. Is it just a case of a shortage in metals and processing chips? Or are consumers learning how to live with less, or taking advantage of the boom and making the leap to electric vehicles?

gas pumps unattended

Covid's effect on the car market

This first part is speculation, but let’s consider firstly why families and drivers across the UK came to the decision to sell their cars.

Whatever the motivation or reason to part ways with a car, it will come as no surprise that UK drivers drove significantly less miles in 2020 than other years. According to By Miles, the average annual mileage for UK drivers was five thousand nine hundred and sixty. More than one thousand miles less than predicted.

Let’s say that you have recently paid off a car on either a PCP deal, or from a bank loan. With fewer miles on the clock, that car is now worth more than it would have initially been predicted to be at this stage. By selling the vehicle now, whilst prices are higher than average, you make more back and the car costs you less throughout the process of paying it back. Car Dealer Magazine reported that a second hand VW Caravelle increased in value by 13.64%, which amounts to £3,625.

To ensure UK industries and businesses didn’t stop, companies took advantage of online communication tools to allow workers to do their jobs from home.

The Office Of National Certificates investigated and found the proportion of working adults who did any work from home in 2020 increased to 37% on average from 27% in 2019. Furthermore, online job adverts including terms related to “homeworking” have increased at a faster rate than total adverts, with homeworking adverts in May 2021 three times above their February 2020 average. And finally, of businesses not permanently stopped trading, 24% stated that they intended to use increased homeworking going forward, with the Information and Communication industry recording the highest proportion (49%). 

With UK workers driving less and preferring to work from home, it stands to reason their cars are more valuable due to low mileage and an unnecessary luxury which anyone would be tempted to sell. Especially in a somewhat temperamental job market.

Global Shortage On Car Materials

A further reason for the increase in value of second hand cars is a global shortage in parts and materials. This is predominantly due to the varying restrictions for workers around the world, sourcing raw material and an inability to complete the types of work needed from home. If there are fewer new cars being produced than high quality second hand with low mileage increase in value.

electric cars charging on sunset

A Stride Forward To A Green Future

Could it also be that we are becoming an increasingly environmental-conscious society, and with an increasing number of affordable electric cars available on the market, we are selling up to go green? If the post lockdown family with parents working from home can survive with one car, why not make it an electric one?

Competitive Prices For Quality Rent To Buy & De-Fleeted Vehicles

First Flexi Lease are the leading name in rent to buy, vehicle leasing and de-fleeted vehicles throughout Exeter & the surrounding Devon towns. We update our listings online regularly, so if you would like further details on a vehicle or to see if we can source a specific one for you, please get in touch.

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