Supply shortage to continue into 2022
A new report is predicting that the high cost of used cars will continue well into 2022.
According to the Cox Automotive and Grant Thornton Automotive Insight Report, the global new car production over the past 18 months has led to a shortage of good quality used vehicles coming to market.
With drivers holding onto their new cars for longer, the chance of finding a relatively cheap used run-around is slim to none. Some nearly-new cars (less than 24 months’ old) are now selling for more than their brand new equivalents, meaning consumers will have to decide whether to pay over the odds or wait until more stock comes along.
The report revealed that during the pandemic, when car manufacturers shut down plants, they cancelled orders of the computer chips that have become so important for modern vehicles. Now they want to ramp up production again, that capacity has been diverted into consumer electronics, while the raw materials shortage means getting hold of a them this side of Christmas is also near impossible.
Philip Nothard, insight and strategy director at Cox Automotive, said: “While there may be a softening of used values, they are unlikely to return to pre-pandemic levels. Supply constraints, the cost of new electrified vehicles, and manufacturing expenses are all going up. The used car price bubble may shrink a little. But it is unlikely to burst.”
Another change which is likely to stick around is the move to buying cars online. Although online retail only makes up a small proportion of car sales today, the Insight Report suggests this figure is growing. It also highlights how drivers might change the way in which they use and pay for vehicles in the future, with short term lease and subscription offers on the rise. This is being driven by the growth in market share for electric vehicles, which often come with new types of finance model.
Other key market dynamics explored in other chapters of this year’s Cox Automotive and Grant Thornton Automotive Insight Report include the impact of electrification; online retail and digital transformation; connected propositions; the changing shape of mobility solutions post-pandemic; as well as changes in the wholesale ecosystem. The Insights team has forecast the UK new and used car figures for the coming year, as well as proposing scenarios which may impact global vehicle transactions.
