Used car sales jump in ‘volatile’ year as EV demand rockets
Used car sales rose more than 11% in 2021 despite a “volatile” year that saw dealerships closed for months and prices experiencing five years of growth in just 12 months.
More than 7.5 million used cars changed hands last year as the market recovered from the effects of 2020’s lockdowns but performance was still 5.5 lower than the pre-pandemic average.
Sales actually fell in the last month of the year but were countered by record-breaking transactions earlier in the year.
December’s sales were affected by the impact of the Omicron variant and the knock-on effect of the global semiconductor shortage which has hit the new car market and is now squeezing used car supplies.
The same shortage in the new car market is thought to be behind much of the rise in demand and soaring prices in the second-hand market.
Auto Trader director Ian Plummer said that the pandemic had increased people’s reliance on and demand for cars, driving 2021’s strong performance. He said: “The used car market saw a huge increase in consumer demand last year, fuelled in part by the growing number of people who believe owning a car is more important than it was pre-Covid, and the one in ten planning on buying a new car to avoid public transport.”
As with the new car market, sales of electric cars saw particularly strong growth, jumping 119% compared with 2020. However, they still represented a small fraction of all transactions, with 96.6% of sales still petrol or diesel models.
Mike Hawes, SMMT chief executive, commented: “It’s good to see the used car market return to growth, even if activity is still below where we were pre-pandemic.
“With the global shortage of semiconductors set to ease later this year, releasing the squeeze on new car supply, we expect more of the latest, cleanest and zero emission models to become available for second owners.
“The demand for personal mobility has undoubtedly increased during the pandemic, so it’s vital we have healthy new car sales to drive fleet renewal and the used car market.”
Industry observers said that the continued pressure on the new car market was likely to maintain the strong performance in the second-hand sector as well.
Chris Evans, head of sales at heycar, said that with new car supply expected to be limited until at least late spring, used cars were “the only realistic option for buyers”.
James Fairclough, CEO of AA Cars, said that searches on the used car platform were up 52% compared with 2020 and predicted continued strong interest. He commented: “For buyers who don’t want to wait weeks, or even months, to get behind the wheel of a new car, the used market’s trump card is instant availability; a second-hand car can be seen, test-driven, bought and driven away all on the same day.”
Ian Plummer predicted that demand would remain strong, keeping prices unusually high. He said: “The sharp hit to new car sales and chip shortages caused prices to rocket, with five years’ worth of growth squeezed into just seven months. With new car supply challenges set to last until at least the middle of the year, the effects will be felt for the next few years as younger vehicles become increasingly scarce.
“We think the pandemic resulted in 1.5 million lost new car sales. There are already a third fewer sub three-year-old used cars available to buy this year than there were in 2019. With no sign of demand easing, price growth won’t be slowing significantly anytime soon and we may have to get used to our cars as appreciating assets.”
Small cars continued to be the biggest sellers on the used market in 2021.
However, demand for “dual purpose” cars such as SUVs grew the most, up 18% on 2020 levels.