Car Prices Have Gone Up: What Does This Mean For You?
Looking at the evolution of the used car market as we see a continued rise in the prices of petrol cars, and an unexpected dip in electric vehicle values. Plus the top 10 cars that are currently seeing the biggest increases AND decreases in price.
The auto industry is currently undergoing significant changes, particularly within the used car market, as alternatively fuelled options enter the market. Both traditional petrol / diesel powered cars and electric vehicles (EVs) have experienced unique shifts in demand and price over the last 12 months.
Interestingly, several petrol-powered cars are seeing a 10%-20% increase in price, and yet others are seeing the same decrease, many of which are EVs. At a time when the rising popularity and global sustainability drive might lead you to expect EVs to retain their value, recent patterns indicate a different story.
Related Reading: The UK’s Most Reliable Used Car Manufacturers (And The Least)
The Uptick in Used Car Prices
The market for petrol powered used cars has seen a continuation of the spike in prices. Today, prices of used cars are still climbing, even as new car deliveries expedite and UK residents become more cautious about spending money because of the financial crunch. In many ways this makes the used car market thrive even more.
As reported by Autotrader, high demand coupled with a limited supply saw the average price of a used car rise by 2.8% in May 2023, reaching £17,815. This marks the 38th month in a row with an increase in year-on-year retail pricing. Several factors contribute to this trends:
Supply Chain Impact: Global events have disrupted the production of new vehicles, causing a reduced supply. This scarcity has, in turn, driven up the demand for used cars.
Economic Influences: Current economic shifts are pushing consumers towards saving more. Consequently, this behavior has led to a preference for the used car market over purchasing brand-new vehicles.
Comfort in Familiarity: A large portion of consumers remain more comfortable with the well-known mechanics and proven reliability of petrol-powered vehicles.
Top 10 used car prices growth: May 2023 vs May 2022 (via Autotrader)
- Peugeot Partner Tepee, £10,184, increase 18.3%
- Fiat Panda, £6,631, increase 16.9%
- Renault Twingo, £5,253, increase 15.2%
- Hyundai i10, £8,559, increase 13.8%
- Volkswagen up!, £9,150, increase 13.8%
- Volvo XC70, £10,990, increase 13.0%
- Suzuki Jimny, £11,399, increase 12.0%
- Hyundai i30, £10,396, increase 11.9%
- Kia Picanto, £9,516, increase 11.8%
- Mercedes-Benz S Class, £36,341, increase 11.3%
Related Reading: The Least Depreciating Cars For New Drivers In The UK
Top 10 used car prices contracting: May 2023 vs May 2022 (via Autotrader)
- Tesla Model S, £35,953, decrease -23.6%
- Audi e-tron, £43,986, decrease -22.8%
- Jaguar I-PACE, £39,830, decrease -22.5%
- Renault Zoe, £15,362, decrease -21.6%
- Nissan Leaf, £15,809, decrease -19.5%
- BMW i3, £18,874, decrease -18.6%
- Porsche Taycan, £95,975, decrease -17.4%
- BMW 8 Series, £48,121, decrease -12.2%
- Land Rover Discovery 3, £6,010, decrease -10.2%
- Volvo XC40, £32,540, decrease -8.6%
Related Reading: 10 Fastest Depreciating Cars 2023
Why Electric Vehicle Resale Values are Falling
Despite the worldwide push for sustainability and cleaner energy, the resale values of EVs are on a downward trend. As reported by Autotrader, despite this being the most substantial year-on-year growth witnessed in half a year, the overall retail growth is somewhat held back by the decline in used EV prices.
The unique challenges faced by the EV segment are:
Technological Pacesetter: The swift evolution of EV technology often makes newer models surpass their predecessors in capabilities. As a result, older versions quickly become outdated, which impacts their resale value.
Battery Longevity Issues: The natural degradation of batteries over their lifespan puts the long-term usefulness of electric vehicles into question. This degradation makes potential second-hand buyers hesitant.
Charging Infrastructure Dynamics: With the proliferation of modern charging stations, there’s a rising concern that older EV models might not align with newer charging technologies. This incompatibility could lead to a decrease in demand for older models.
Related Reading: Are All Electric Vehicle Chargers The Same?
The Bigger Picture: Environmental Concerns vs. Market Dynamics
While environmental concerns remain paramount, market dynamics can’t be ignored. For many, the decision to buy a vehicle—new or used—hinges on a balance between cost, familiarity, and future-proofing their investment.
Balancing Purchase Decisions: Environmental priorities are undeniably essential, but you should also factor in market dynamics when deciding to buy a vehicle. Many potential car buyers weigh their decisions based on costs, familiarity with the vehicle type, and ensuring the longevity of their investment.
Reinvigorating the Resale Market: To bolster the used car market, particularly for electric vehicles, there are actionable strategies to consider. Establishing Certified Pre-owned Programs tailored for EVs can reassure potential buyers about vehicle quality and battery lifespan.
Addressing Long-Term Concerns: Alleviating worries about the electric vehicles’ future viability is vital. Initiatives like affordable battery replacement schemes can address apprehensions related to battery degradation. An informed public then creates consumer confidence. Thus, educational outreach emphasising the durability and advantages of EV ownership can effectively reshape perceptions and build trust.
The automotive landscape is undergoing significant changes, with surprising trends emerging in the used car market. While traditional petrol-powered cars see a resurgence in demand, electric vehicles face challenges affecting their resale value. Understanding these dynamics is essential for both consumers and stakeholders in the industry as they navigate this evolving market space.
Related Reading: Why Click4Warranty: The UK’s No.1 Extended Car Warranty Cover
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Related Reading: The Consequences of NOT Having Click4Warranty Car Warranty Cover