Used car prices are rising even more, but could a slowdown be on the horizon?
Used car prices have skyrocketed over the past two years. In fact, price growth has been so rapid that some used cars are now more expensive than their new counterparts!
But has this growth reached its maximum? And could a slowdown be expected? New data suggests that might be the case. Continue reading to learn more.
What’s going on with used car prices?
According to a new report from Auto traderused car prices have risen 31.9% over the past 12 months.
Data shows the average price of a used car has risen by nearly £4,000 and is now £17,929, up from around £14,000 in February 2021. This is the twenty-third month consecutive rise in used car prices.
Some of the models that have seen the biggest increases in their asking price include:
- SEAT Alhambra (+56.4%)
- Ford S-Max (+52.8%)
- Toyota Auris (+50.5%)
- Skoda Yeti (+50.3%)
- Ford Grand C-Max (+48.9%)
Has growth peaked?
As used car prices continue to rise, there are signs that the rate of growth may have peaked. For example, statistics show that prices in February were only 0.6% higher than in January.
This is the smallest month-over-month increase in nearly a year, the last time used car prices rose so slowly in April 2021.
Are prices likely to drop soon?
If you’ve put off buying a used car in hopes of lower prices, that doesn’t seem likely yet. According to Auto Trader, although price growth is likely to subside, people should not confuse this with an upside market.
As Richard Walker, Director of Data and Insights at Auto Trader, explains, “While there are potential headwinds, such as rising inflation and the possible impact of conflict in Ukraine, demand for consumers remains robust.”
The rate at which used cars sell has also increased significantly. The average used car now leaves the forecourt 11 days earlier than at the same time last year.
According to Walker, “combined with continued pressures on the supply of new and used cars, which the current conflict may further constrain, these market dynamics will ensure that used car prices remain high for some time to come.”
He added: “Any suggestion of a bubble bursting is therefore based on pure speculation and not data, which clearly indicates that very high prices will remain for some time.”
Can you save money when buying a used car?
So, with used car prices now at record highs, is it still possible to pick up a bargain? In short, yes!
Here are some tips to help you.
Unless it’s an emergency, shopping around is the easiest way to get the best possible deal on a used car.
It is recommended that you visit and exit at least one or two dealerships to find out the lowest possible price at which they are willing to sell you a car. Many will let you know just before you leave.
2. Check online reviews
Before bidding on a used car, find out its current market value to make sure you’re not paying too much. Sites such as Which car, parker and Auto trader can help with that.
3. Find out how long the car has been on the market
Try to find out how long the car has been on sale. If you establish that a car has been sitting on a dealer’s forecourt for a while, they might be willing to accept a lower offer.
4. Use all the flaws in the car to negotiate
Used cars are likely to have a few flaws, such as dents, scratches, and paint chips. If that’s not a deciding factor for you, you can use them to potentially negotiate a lower price.
5. Opt for a private seller
Unlike a dealership, a private seller’s main concern is not to make a profit. You will probably be able to negotiate better with them as they are not professional salespeople and can be more flexible about what they are willing to accept for the car. The downside, of course, is that there are fewer safeguards and warranties with a private seller than with a reseller.
To be able to drive on UK roads, you will need car insurance.
Shopping around for insurance using websites is one of the easiest ways to get the best possible deal for your needs. The Motley Fool has compiled a list of the best car insurance comparison websites to help you get started.
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