Can you guess the rough size of the second-hand car market in the UK? Here’s one hint for you. In three months between April and June 2021, the second-hand market sold over 2.1 million vehicles. According to the Society of Motor Manufacturers and Traders, the record sales registered in Q2 is the second largest car sales quarter in history, recording a growth of over 108%year-on-year. Under 13% of used vehicles bought during Q2 2021 are under 3 years old. For comparison, second-hand sales reached up to 6.6% on 2019 sales levels. In short, the British second-hand car market is experiencing an unprecedented boom.
However, far from being a budget-friendly decision, customers who are buying a second-hand vehicle are faced with a significant premium. Yet, for many customers, there is no other option.
Why the second-hand car market UK is booming
The pandemic has encouraged many professionals to work remotely from home. However, as offices are reopening their doors, employees are now looking at safe solutions to avoid public transport as much as possible. Covid fears remain high, so more and more individuals who would usually rely on public transport to commute to work prefer a private vehicle. As a consequence, the demand for cars in general is reaching an all-time high.
Supply issues are hitting the UK motor industry for a variety of reasons. Brexit-related shortages were inevitable. However, stockpiling at the start of 2021 has allowed car dealerships to cruise comfortably through the first four months of the year. The global shortage of semiconductor chips has hit car production around the world, affecting new vehicle imports to the UK. Additionally, the pingdemic campaign forced countless industry specialists to self-isolate, leaving factories with lingering staff shortages. The SMMT reported the worst July for automotive production in the UK since 1956. Shortage of new vehicles, unfortunately, leads to a shortage of used vehicles.
The prices are rocketing
Post-pandemic mindsets attribute second-hand car market sales to budget-conscious households. However, the shortage of automotive supplies also affects second-hand vehicles as a result of the surging demand. In other words, the expected depreciation in price is turning into a game of increased appreciation, with an average year-on-year increase in prices of over 14% in July. Some used models, such as the Audi RS3 with a price increase of over 30%, have seen their value rocket out of control. Auto Trader even showed curious results in July, as second-hand cars were listed at a higher price than some of their brand-new counterparts or within 10% of the price of a new vehicle.
For customers who are exchanging vehicles as part of the sales process, it’s good news, as they can recover a huge portion of the cost.
The most popular second-hand models
Over 96% of used cars account for petrol and diesel vehicles, with electric cars representing only 1.3% of the second-hand car market in Q2. However, the demand for electric and hybrid vehicles is growing fast and steady, tripling in the second quarter. While the acceleration of green automotive uptake is less than expected, the SMMT also reminds analysts that the semiconductor chip shortage can falsify the full picture.
Among their favourite models, Britons turn to popular makes and colours. Ford Fiesta, Vauxhall Corsa, Ford Focus, and VW Golf in black, silver, grey and blue body colours make the top of the list.