Is the Used Car Market Growing?
The coronavirus pandemic has been a difficult time for industry, with reduced public spending contributing to the shuttering of many businesses and ventures. But some industries managed to thrive, especially in the latter months of 2021.
One area that saw unanticipated growth in the last few years was the used car market. A significant increase in market share in 2021 was a marked shift from the norm in the automotive industry, and one that had manufacturers and showrooms alike concerned for the future of automobile manufacture.
How Much Did the Market Expand in 2021?
According to recent figures from the Society of Motor Manufacturers and Traders, second-hand car sales had grown by 11.5% – representing well over 7.5 million units transacted. The significant increase in used car sales was partially attributed to the easing of coronavirus restrictions, however, there was a much more significant event which impacted the motoring industry as a whole.
A semiconductor shortage in 2020 all but halted production for large manufacturers in a number of businesses, with automotive manufacturers unable to produce their usual volume of new vehicles. As supply of new vehicles slowly began to fall behind demand, showroom floors began to empty – and consumers started to look to the used market to buy their next car.
What are the Benefits of Buying Used?
The obvious benefit to buying used over new is that of price. Used cars have already lost their showroom value, where new cars depreciate in value from the moment you buy them. In essence, the value of your investment is better preserved with used vehicles than new ones.
Buying used can also save you money – and indeed time – in other ways, though. For example, a used Volkswagen dealership in London will not only be able to offer you a better price for an older model of Volkswagen, but also be much easier to navigate in terms of leasing and repayments. Where new dealerships can often pressure potential buyers to sign up to unnecessary warranties and optional extras, on top of unfavourable repayment rates, used showrooms and dealerships are more likely to work with you in finding the best route forward.
What Will Happen in 2022?
The outlook for 2022 is difficult to discern for the used car industry. There are multiple complex factors to take into consideration, from the semiconductor shortage that remains ongoing to the recession potentially facing the UK in the coming months.
With households more concerned about their outgoings, car purchases are likely to face slowdown – but those that do buy a car are more likely to opt for the economic benefits of a used car over the cost of a new one. As a result, the used car market is likely to recede slightly, but remain strong against new car sales.