If you have been keeping tabs on the used car market, you’re probably aware that used car prices have been steadily rising over the recent past. But which models have seen the biggest price increase? More importantly, will used car prices go down in 2022? Let’s take a look.[top_pitch]
What has happened to used car prices in the last 12 months?
According to a new report from online car marketplace Auto Trader, used car prices rose by almost a third (30.5%) in December 2021 on a year-on-year and like-for-like basis.
This marks the twenty-first consecutive month of growth. The average price of a used car in December 2021 was £17,816, up from £13,652 in December 2020.
Which used cars saw the biggest price increases?
The car that saw the biggest price increase was the Seat Alhambra. Its price rose by 50.40%. This was followed by the Renault Grand Scenic and the Skoda Octavia. The prices of both of these cars were up 47%.
The Ford S-Max and the Skoda Yeti round out the top five, with price increases of 46.90% and 46.40% respectively.
Here is a complete list of the top 10 cars with the highest price increase, according to Auto Trader.
December 2020 av. asking price
December 2021 av. asking price
Renault Grand Scenic
Land Rover Defender 110
Ford Grand C-Max
Why are used car prices going up?
According to Auto Trader, the record price growth has been driven by unique market dynamics, including high levels of consumer demand.
This increased demand has been driven by an increased appetite for car ownership among Brits. For example, consumer research conducted by Auto Trader in December revealed that owning a car had become more important to 33% of Brits than it had been prior to the pandemic.
The other factor that has driven the record price growth of used cars is supply challenges. For example, a global semiconductor chip shortage means that customers are facing lengthy delays in receiving brand new cars. Many are therefore turning to the used car market and, as a result, used cars have achieved the unusual status of being an appreciating asset.
This has been especially true for ‘nearly new’ cars (less than 12 months old), with prices rising exponentially.
According to Auto Trader, nearly a quarter of ‘nearly new’ cars are now priced higher than their brand new equivalents, with one in two priced within 5% of their brand new equivalents.
Will used car prices go down in 2022?
According to Richard Walker, Auto Trader’s director of data and insights, it’s highly unlikely that prices will drop. He says that the two main factors driving the rise in used car prices, namely supply constraints and strong demand, show no sign of abating anytime soon.
Consequently, used car prices are likely to remain high for the foreseeable future, though some experts anticipate that price growth will slow down.[middle_pitch]
How can you stay within your budget when buying a used car?
Planning to buy a used car in 2022? Here are three simple tips to help you stay within your budget.
1. Know your budget
Before approaching a car dealer, determine how much you can afford to spend on a vehicle. Otherwise, you could easily be persuaded to pay thousands of pounds more than you can afford.
Aside from the actual cost of the car, keep in mind that you will also need to budget for other costs such as car insurance, an MOT, servicing, and maintenance.
2. Buy with your head, not your heart
Don’t make the mistake of falling in love with a car before you have actually bought it. You don’t want to pay over the odds for a particular car just because you have a soft spot for it when there could be cheaper alternatives.
3. Negotiate the price from a position of knowledge
Having good knowledge, especially regarding pricing, can help you stay in control during negotiations. Research the price of the model you want nationwide to get a good picture of its value. You’ll then be in a stronger position to negotiate a price with your local dealer and to know when you’ve got a good deal.
The post Revealed! Used cars with the highest price increase over the past year appeared first on The Motley Fool UK.
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