The used car market is seeing unprecedented interest in 2022, fuelled by a number of factors. Sometimes seen as the poor relation of the motoring industry, this sector is being actively sought out by motorists who may never have considered investing in a pre-owned vehicle. While traditionally quoted factors like depreciation may have put potential buyers off in the past, it seems that the advantages to buying a used car or van are now outweighing any prejudices from previous eras. With the next few years crucial to the motoring industry and society as a whole, this shift in interest may turn out to be a long term trend.
The demand for used cars in the UK is being increased for some quite disparate reasons. One of them is the rise in popularity of electric vehicles (EVs), which is itself the result of various pressures. In the first quarter of 2022, EV sales were up 120% over the last quarter of 2021. As 2030 approaches, many motorists considering their next purchase are taking into account the fact that, the sooner they get used to driving non petrol / diesel powered vehicles, the better. The situation is helped by the fact that there are at least 140 EV designs on the market, and the government has made several pledges to improve charging infrastructure.
The uptake of electric technology itself over recent years has also spread to the second hand market. Early adopters of EVs have now moved on to newer models, leading to a significant increase in the number of used EVs for sale. As the battery and power chain are the most valuable parts of these machines, their resale value is proportionately quite high. Combined with tax breaks, lack of congestion charges, and freedom to use clean air zones, buying a used electric vehicle can make a lot of economic sense. Also, their roadworthiness is now well entrenched thanks to changes and training incorporated into MOT test centres.
The early 2022 used car market as a whole has witnessed a marked rise in the popularity of automatic vehicles. In fact, sellers report that three quarters of used cars and vans sold are automatics. Industry experts say that motorists are abandoning hand shift gearboxes because they know that EVs don’t have them; indeed, the vast majority these vehicles have automatic transmission. Their design means they provide a huge amount of torque from the power plant, which gives superb acceleration and doesn’t require quick gear changes. As there is a different driving test for automatic and manual vehicles, most learner drivers will inevitably apply for the former option.
Understandably, then, used automatics are by far the most popular models on the market. As well as their dovetailing with developments in the EV sector, the fact is that they are also readily available. New cars have seen a sharp drop in numbers in markets around the world, due to shortages of materials (especially nickel, which is largely sourced from Russia) and supply chain issues. In the UK in particular, ramifications of Brexit and the covid pandemic have combined to make things even harder for British based manufacturers like Nissan.
There is a serious downside to the popularity of used automatic vehicles; namely, their cost. As with any other commodity, shortage leads to higher prices. In the case of used cars, and automatics in particular, this has given rise to a strange kind of inflation. Where motorists used to expect to pay more for a new vehicle than a pre-owned model, this situation has seen a reverse. In fact, industry insiders say that used cars sometimes now cost as much as £26,000 more than new ones. This “used car premium” is unprecedented on the UK market, and may persist for some time.
In part, this is due to motorists being unwilling to wait for the shortage of new vehicles to be fixed; drivers would rather have a decent, used model as soon as possible, especially if their current vehicle is facing a potential MOT test fail. To make things worse, the interest rate rise introduced by the Bank of England in the spring of 2022 made financing on a new car much more expensive over the term of the loan. So, it seems that motorists will have to pay more to take ownership of the most popular cars on the market, even though these are second hand.