Stalling new car deliveries pushes used motor sales to record highs

A record number of second-hand cars were purchased in the UK between April and June, according to new industry figures published this morning.

Demand for used motors is at an all-time high due to a combination of pent-up demand following the pandemic and – more notably – the significant drop in new car supplies as a result of the global semiconductor computer chip shortage.

The Society of Motor Manufacturers and Traders said the used car market grew 108.6 per cent in the second quarter of 2021, with more than 2.1 million motors changing hands.

However, those buying second-hand cars are paying a premium as a result of the recent huge surge in demand.

Industry data shows that a total of 2,167,504 used cars were bought in the months of April, May and June – up 6.6 per cent on 2019 pre-pandemic levels and the best second quarter performance on record.

In fact, bosses confirmed it was the second highest quarterly performance for used car sales ever, falling just 1,095 transactions shy of the 2020 third quarter high of 2,168,599, which was artificially inflated by the fact showrooms had been forced to close for much of the first half of that year due to the Covid-19 outbreak. 

The SMMT said the spike in sales was due to a combination of the country’s gradual emergence from lockdown and stock shortages in the new car market.

Latest registrations statistics published a week ago show that new motor sales plunged to their lowest July level since 1998, with deliveries bottlenecked by the global chip shortage. 

This has forced many consumers to instead turn to used models to replace their existing vehicles, with April sales alone up 307.4 per cent on 2020 (and 5 per cent up on 2019) with 724,743 transactions in the month.  

May and June also posted sales increases of 9.9 per cent and 4.6 per cent on pre-pandemic levels respectively, which were the best performances for both months ever seen.

It means that used car transactions for the first half of 2021 are up by a third (33.3 per cent) year-on-year to 3,855,259 units. 

However, the lockdown during the first three months means second-hand sales are still 4.9 per cent down on half-year 2019 levels.

With increased demand comes higher prices 

With second-hand vehicle interest and sales at near record levels, so are prices of used motors. 

With buyers growing increasingly frustrated with long waiting times and delivery delays for new models, many have turned their attention to used cars.

Heycar claimed in July that it has tracked average prices of Volkswagens on its website increasing by 8 per cent in a month – jumping from £19,718 to £21,296.

SEATs have seen a similar hike with a 7 per cent surge pushing the average stock price increase from £15,217 to £16,241 in a month.

That’s followed by a 6 per cent rise in value for Mercedes-Benz vehicles – up from £27,770 to £29,509.

Online automotive marketplace Heycar says it has seen the average price of a used VW rise by 8% in just one month as more drivers turn to the second-hand market

Online used car marketplace BuyaCar also said it had seen values ‘shoot up to an unprecedented level’ it calls ‘new record prices’ in recent weeks, with evidence of drivers paying more on average than ever before to secure a second-hand motor.

This increasingly strangled supply of new cars has seen the average price of a used models sold on its website rise from £13,108 in January to an all-time high of £15,399 in May – with prices continue to rise since.

It also claims that the average price of its top five best-selling cars broke the £17,000 barrier for the first time since the website launched in 2002. 

SMMT stats show there’s been an increase in sales of older used cars with only 12.7% of all vehicles sold in April to June being three years or under, the lowest on record

Commenting on the spike in second-hand motor demand, Mike Hawes, SMMT chief executive, said, ‘This is welcome news for the used car market as transactions rebounded following nationwide lockdowns which closed retailers. 

‘More motorists are turning to used cars as supply shortages continue to affect the new car market, and the increased need for personal mobility with people remaining wary of public transport as they return to work.

‘A buoyant used car market is necessary to maintain strong residual values which, in turn, supports new car transactions.

‘We now need to see a similar rebound in new car sales to accelerate the fleet renewal necessary to deliver immediate and continuous improvements in air quality and carbon emissions.’ 

Demand for used battery electric (BEV) and plug-in hybrid (PHEV) vehicles tripled in the second quarter to 10,903 and 16,202 – up 353.9 per cent and 349.8 per cent respectively.

However, these plug-in cars represent just 1.3 per cent of all second-hand vehicle transactions as older versions of electrified vehicles are slowly entering the used market.

Petrol and diesel powertrains, meanwhile, made up 96.4 per cent of the quarter’s used car market at 2,090,396 units. 

In addition, increased demand overall has led to an increase in sales of older used cars with only 12.7 per cent of all vehicles sold being three years or under, the lowest on record.

Ford’s Fiesta was the most-bought used car in the second quarter of 2021, while black was the most popular vehicle colour to change hands. 

Ford’s Fiesta was yet again the most-bought used car in Q2 of 2021. Black was the most popular vehicle colour to change hands in April to June

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