Spark Trader Limited reports:
Sales of second-hand cars in Britain have more than doubled in recent years and prices have risen sharply. At the same time, the global car market, including China and the United States, has seen similarly “crazy” growth. What are the reasons for the big price increase of used cars?
Data from the Society of Motor Manufacturers and Traders (SMMT) showed the used car market grew by 108.6 per cent in the second quarter of 2021 compared with the same period last year, with more than 2.2 million vehicles changing hands. Sales of used cars in 2019 were 6.6 percent higher than before the COVID-19 outbreak. Gasoline cars account for most of those sales, and electric cars have been slow to catch on.
The Society of Motor Manufacturers and Traders in the UK said sales of used cars have increased in tandem with the reopening of businesses following the easing of COVID-19 restrictions. Black, silver, blue and gray are the most common car color choices.
However, at about the same time as the rise in used-car demand, sales of new vehicles built in the past three years accounted for just 12.7 per cent of total car sales, the lowest level on record.
Dakesh Gupta, chief executive of Marshall Motor, one of the UK’s top 10 car dealers, said a shortage of computer chips had reduced the number of new cars on the market, thus driving up usedcar prices. He expects that to continue until 2022.
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COVID-19 and chip shortages
The BBC’s economic affairs editor Faisal Islam said many carmakers had stopped producing new cars as sales plummeted because of the coronavirus and the lockdown.
And auto chip makers are shifting chips normally used in cars to other consumer electronics markets, including medical machinery.
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As a result of the COVID-19 outbreak, many chip makers have shifted chips intended for use in cars to products such as medical machines, such as ventilators.
Mike Harvis, head of the Society of Motor Manufacturers and Traders, said many consumers were turning to the second-hand market because of a shortage of new cars.
He noted that after the government lifted quarantine restrictions, people were still cautious about using public transportation when returning to work, preferring to drive their own cars.
The US and China markets are similar
It’s not just the UK. In June 2021, U.S. Treasury Secretary Janet Yellen noted the same phenomenon in the U.S. auto market.
Among them, used car prices rose by a record 10.5 per cent in June, on top of three consecutive months of increases, leading to a mind-blowing 45 per cent year-on-year inflation rate for used car prices.
In addition to chips, the outbreak has affected the supply of other auto parts, resulting in fewer new cars being produced. When the auto industry rebounded after the pandemic, some basic supplies did not return and production had to be slowed.
The Chinese market has also seen a sharp rise in the prices of some brands of used cars.
Hoarding of chips by some big carmakers has also led to a tight supply of automotive chips in the market, according to Industry sources quoted by Chinese media.
Electric cars and climate change
Despite surging demand for used cars, used electric and plug-in hybrid vehicles accounted for just 1.3% of used-car sales in the second quarter of 2021.
The SOCIETY of Motor Manufacturers and Traders said the market for rechargeable used cars had yet to accelerate in the same way as the market for new cars.
The industry’s key body said the transition of the entire used-car market from traditional fuels to new energy vehicles was a huge challenge.
The slow spread of green cars in the UK comes as the United Nations publishes a major scientific report saying human activity is changing the climate in unprecedented and sometimes irreversible ways.
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The transformation of the UK used-car market from traditional fuels to new energy vehicles is a huge challenge.
So while a rebound in used-car sales is good news for the auto industry, they are hoping for a similar rebound in new-car sales to immediately and consistently improve air quality and reduce carbon emissions.
But new car registrations fell by almost a third in July, the worst July sales since 1998.
Only 123,296 new cars were registered in the UK in July 2021, down 29.5% from July 2020.
Reprint indicated source：Shine Trader Limited Live information