Second-hand car sales soar amid shortage of new models

Second-hand car sales in the UK have more than doubled in the last few months after a shortage of new models.

Year on year, the used car market grew 108.6% in the second quarter, with more than 2.2 million vehicles changing hands, the Society of Motor Manufacturers and Traders (SMMT) said.

The number of sales was up 6.6% on pre-pandemic levels in 2019.

But petrol cars made up most of the sales, but demand for electric cars is growing fast.

Increased demand led to a rise in sales of older used cars, with only 12.7% of all vehicles sold being made within the last three years, the lowest on record.

The SMMT said the increase in sales tracked the country’s easing of Covid restrictions, with demand rising as businesses reopened.

Ford Fiestas, Vauxhall Corsas, Ford Focuses and Volkswagen Golfs were the most popular models, with black, silver, blue and grey being the most common colour choices.

Marshall Motors, which is one of UK’s top ten car dealerships, said on Tuesday that it had recorded revenue and underlying profit in the first half of the year.

Chief executive Daksh Gupta said the company had “seen exceptional market tailwinds in the used car market” as a shortage of computer chips reduced the numbers of new cars on the market.

“Ultimately what that has done is push used car prices up significantly,” he told the BBC Radio 4 Today programme.

He added that it is “difficult to call” how long there would be such a high demand for used cars “because the whole situation links to new car supply”.

“The position is unclear and many manufacturers are having to deal with very complex production challenges,” he said. “We expect this disruption to go well into 2022.”

SMMT boss Mike Hawes said many consumers had turned to the second hand market due to the shortage of new cars at a time of “increased need for personal mobility with people remaining wary of public transport as they return to work”.

The shortage has been linked to a lack of parts. When lockdowns forced production lines to halt, microchip manufacturers diverted the chips that would normally go into new cars to the consumer electronics market, and supply is yet to fully recover.

It has driven up the price of second hand cars, said the SMMT. One dealership, Nuneaton Cars, said buyers were attempting to gazump each other to get hold of used cars already marked as sold.

Sales of second- hand battery electric vehicles and plug-in hybrid electric vehicles more than tripled in the second quarter.

However, electric vehicles made up just 1.3% of second-hand car sales in the second quarter of 2021.

The SMMT said the used electric car market “is not yet seeing the acceleration of uptake as has been seen in the new car market”.

“The scale of the challenge to transition the entire used car [fleet] away from traditional fuels remains significant,” the industry body said.

This comes amid a major UN scientific report that said human activity is changing the climate in unprecedented and sometimes irreversible ways.

Despite this, Mr Hawes said the rebound in sales was “welcome news” due to a buoyant used car market being “necessary to maintain strong residual values which, in turn, supports new car transactions”.

“We now need to see a similar rebound in new car sales to accelerate the fleet renewal necessary to deliver immediate and continuous improvements in air quality and carbon emissions,” he said.

New car registrations fell by almost a third last month, marking the worst July sales since 1998.

Just 123,296 new cars were registered in the UK, a 29.5% decline on July 2020.