Car buyers growing increasingly impatient with delivery delays for new motors are paying more for some year-old used models than they would if they ordered one to come straight from the factory.
A never before seen spike in used values in recent months is the result of an ongoing computer chip shortage which has limited new vehicle production and significantly pushed back delivery schedules for some of the latest models.
The average price paid for second-hand cars is at a never-before-seen high, soaring by more than a fifth in September alone.
Exclusive data provided by vehicle valuations experts Cap HPI reveals which 12-month-old models are in highest demand right now, with drivers willing to pay up to 20 per cent above ‘list price’ for a car with 10,000 miles already on the clock.
Paying a premium for second-hand cars: The average value of used motors listed on Auto Trader last month rose to £16,067, up from £13,829 in September 2020 – an increase of 21.4%. And it means some used models are now selling for higher prices than they cost new…
The nation’s largest used car sales platform, Auto Trader, says values of second-hand cars have grown for 18 consecutive months – essentially since the pandemic struck.
With the Covid-19 outbreak forcing car factories to close down for at least six weeks from March 2020 – and a subsequent shortage of computer chips ever since – order books are bursting at the seams and delivery schedules, in some cases, have extended to over 12 months.
The average value of a second-hand car listed on Auto Trader last month rose to £16,067, up from £13,829 in September 2020 – an increase of 21.4 per cent annually. And it means some used models are now selling for higher prices than they cost new.
Which second-hand cars are selling for above their new prices?
Cap HPI, which tracks used car sales and provides vehicle valuation information to drivers, has provided This is Money with information about which year-old motors are currently changing hands for above their average list prices.
Topping the charts is the previous-generation Dacia Sandero, which was replaced with a new version earlier this year.
The average price paid for one new – where stocks remain – is £9,773 while the average sale value of used examples with 10,000 miles on the clock is £11,673 – a premium of 19.4 per cent.
It’s also a similar case with the all-new Sandero. Cap HPI says used values for a six-month old version is £12,908, while a new example ordered will – on average – cost just £11,843.
It means buyers are currently willing to pay around the same for a year-old previous-gen Sandero as they are the latest example, simply because of long waiting times.
This is also the norm for year-old Duster SUVs, which are around £1,000 more expensive used – and with 10,000 miles already clocked up – than its new price commands.
The average price paid for Dacia’s outgoing Sandero supermini – where stocks remain – is £9,773 while the average sale value of used examples with 10,000 miles on the clock is £11,673 – a premium of 19.4%
It’s a similar case with the all-new Sandero (pictured left). Used values for a six-month old version is £12,908, while a new example ordered will – on average – cost just £11,843. A used premium is also currently the norm for year-old Duster SUVs (pictured right), which are around £1,000 more expensive second-hand – and with 10,000 miles already clocked up – than its new price commands
Source: Cap HPI data accurate up to end of September 2021
Derren Martin, head of valuations at Cap HPI told us: ‘Everything has gone up in value in recent weeks.
‘It’s due to demand being strong and constraints on new car supply, which leads to issues with used cars because you’re not getting the part-exchanges and flow of older models entering the market.
‘What most surprising is that bog-standard mainstream cars are going up in value, though not all necessarily above list. But the Sandero and Duster are an exception to this.’
Other examples of year-old mainstream models being more expensive than a new one include diesel Range Rover Evoques as well as oil-burning Land Rover Defenders and Discovery Sports.
This is off the back of Land Rover confirming that some of its new models are now subject to waiting lists dating back over a year.
Jaguar Land Rover said earlier this year that there are waiting times of over a year for some of its models due to the semiconductor chip shortage. This has pushed average used values of year-old Range Rover Evoque (left) and Land Rover Defender (right) diesels £3,000 higher than the new list price
Used values of year-old Minis Coopers with 10,000 miles on the clock are 6% above the new list price for the model
Other examples of mainstream motors in the standings are the Mercedes CLA Coupe, Mini Cooper, Volvo XC40, MG ZS and Ford Puma.
The rest of the 25 cars listed by Cap HPI as being sold with a used premium are ‘aspirational models’, that can sometimes demand higher values due to smaller production numbers and exclusivity.
For instance, a Porsche 718 Spyder sports car on average costs £86,250 new, while new models are £74,850. It’s a similar story for the Macan compact SUV, which is currently around 14 per cent more expensive second hand than it is new.
Martin tells us that year-old examples of aspirational models, like the Porsches, Ford Mustang and Lamborghini Urus, are ‘usually bubbling around’ new car prices.
Cap HPI says Porsches, like the Macan pictured, usually hold their value well, though it is still a rarity for used examples to be priced higher than they cost new
Want a Porsche 718 Spyder? If you’re unwilling to wait for a new one with an average price of £74,850 to arrive in a matter of months, you will have to pay a £11,400 premium to get a second-hand example today – and that’s with an average of 10,000 miles already covered
With electric car demand at an all-time high, why are not more battery models in this list?
Of the list of 25 year-old cars that cost a premium on a new example, just two electric models feature: the Tesla Model X and Porsche Taycan.
Both are what Cap HPI deem ‘aspirational’ cars with smaller production outputs, meaning a second-hand premium tends to be more common.
With more drivers considering the switch to EVs than ever before, why are not more battery vehicles commanding higher used prices than new?
‘Partly because they tend to have high list prices anyway, so it’s hard to go above those,’ Derren Martin told us.
‘We also believe it’s because there is still more demand for new electric vehicles than used ones.
‘Used EVs are already quite expensive, so it’s hard to push their values any higher. When you compare them with a petrol and diesel equivalent, it’s the former that standout as the better value.’
Cap HPI experts say electric car used values are already so high because there is still more demand for new electric vehicles than used ones, with buyers more willing to wait for a delivery. That said, average values of year-old Tesla Model Xs are 9.6% – around £9,000 – more than new list prices
The only other electric model in the list of 25 cars with the highest premium to pay for a used example in the Porsche Taycan
When are used car prices likely to drop?
‘We’ve been predicting that this can’t carry on forever,’ Cap HPI’s head of valuations explains.
‘Once you’re getting used cars above new car prices, that is pretty much unsustainable. But, if you can’t get the new cars, it might go on for a bit longer than most experts have predicted.’
Mr Martin adds that the second-hand market is likely to plateau before it starts to drop, though that might not happen for some time yet: ‘There is no end in sight for the semiconductor chip shortage at the moment and we think that’s going to last until half way through next year before it returns to normality.
‘That means there’s going to be a lot less cars coming to the market and this phenomenon of higher used values is going to continue.
‘And even if demand drops, we don’t think there’s going to be enough supply coming through that’s going to reverse these massive increases in used prices in a hurry.’
There is already evidence of the second-hand market becoming more limited than it was a year ago.
On average last month, some 362,000 used cars per day were listed for sale on Auto Trader. That compares to an average of 381,000 a year ago – a decline of 5 per cent.
Richard Walker, director of data and insights at the car sales website, said: ‘The shortage in both new and used car supply is resulting in a massive acceleration in used car prices, with the level of growth now over 20 per cent.
‘On the surface, this price growth could be seen as a negative for those car buyers forced to spend more on their next car. However, similar to moving home, if you have a car to sell, either privately or as a part-exchange, it too will have gone up proportionately which will help to even out the increase.’
