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Rising car prices

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Rising car prices

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Rocinante

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I think everyone is aware of the bonkers second hand car market at the minute that we have read about, but just to give people a feel for the current market (in a completely unscientific way), I thought I would post this, as the results surprised me.

Basically I'm considering buying a car, but I'm in no rush, especially considering the current market, so I noted down some cars from Autotrader last August. These were the lowest price available of that particular model (under 50,000miles &<4years old). Had another look today for similar and found some dramatic changes in 6 months. I appreciate there are a number of factors at play, especially on any given day, but the changes on these two particular days are quite consistent.

Fiat Tipo 1.6 Multijet Lounge, 2017, 49026 - £7600. Aug21
Fiat Tipo 1.6 Multijet Lounge, 2018, 42936 - £9700. Feb22

Dacia Logan 1.5Dci ambiance 2017 35884 - £7,490. Aug21
Dacia Logan 1.5Dci ambiance 2017 27347 - £9250. Feb21

Vauxhall Astra 1.6CDTi Design 2017 47000 - £7487 Aug 21
Vauxhall Astra 1.6CDTi Design 2018 50000 - £9500 Feb 21

Kia Ceed 1.6CRDI 2017 40000 - £8250
Kia Ceed 1.6CRDI 2017 39810 - £9700
 
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Those figures don’t surprise me because I just sold my E Class for close to what I paid for it 3 years ago.

I picked it up cheaply because it was a diesel and they were getting bad press at the time. I just made sure I picked one that was going to comply with ULEZ legislation.

In all honesty, I thought the value was going to continue to dive. It was bought to be used as a workhorse and complete long trips to Italy and back.

However, COVID came along and the car spent most of its time on the Driveway, except for a few trips to Europe and the U.K. The pandemic also slowed down the supply of chips and the introduction of ULEZ.

Rather than continue to see it sit on the Driveway I decided to test if it really was a “Seller’s market” and prices had gone up.

I advertised it at a suitably inflated price, especially as the Dealer and a certain car buying website were prepared to offer more than Autotrader suggested you should be paying for it from a Dealer.

Now I had the usual hassle phone calls that you always get, but no worries because it was sold in a week.

The real problem is when and what to replace it with.
 
I posted a couple of months back about getting a payout on my written off punto evo of £1400 when I paid £1500 for it in 2018

Yesterday I had a memory come up on Facebook a picture I took in 2015 of a Mini Countryman SD (on the forecourt of a mini dealership) which would have been about 6 months old at the time with a card in the window for £15,000 looked up on eBay and a near identical 2015 car was now being advertised at £15,500……7 years later! And not with a main dealer

This is madness
 
I'd say unless electric cars suddenly get cheaper to buy probably won't.

As it stands at the moment lots of people are engaged in wait and see before they invest in something that will likely be heavily devalued by environmental legislation at some point in it's life.

The other thing is...cars are a low profit item at the lower end of the market. If you can sell one at 18k rather than 4 at a discounted 15k there's a good chance you'll have made the more money on selling one. That one comes with lower warranty risk exposure than the 4 as well.

It's not in the manufacturer interest to flood the market and discount.

If no-one buys new cars second hand becomes rarer and it all gets more expensive.
 
Hi

I see a blend of:

Chips meaning cars are harder to supply
Covid.. effecting supply

Electric revolution.. clean air zones

Owners are hanging onto their existing cars longer.. not trading 'for new'

Auto industry thinks 2023+ for chip supply to stabilise.
 
Chips and Covid certainly had an impact, but I don’t think this fully explains it all. Secondhand prices have increased in other countries because of these factors, but only by modest levels.

Dare I suggest it’s panic buying in this country that’s driving the demand. Have the British public moved from Loo Rolls to secondhand cars?

I did make a joke after we voted for Brexit that we’d end up like Cuba. All driving around in old cars because we couldn’t get new ones.

Doesn’t seem so funny now.
 
Rocinante said:
I think everyone is aware of the bonkers second hand car market at the minute that we have read about, but just to give people a feel for the current market (in a completely unscientific way), I thought I would post this, as the results surprised me.

Basically I'm considering buying a car, but I'm in no rush, especially considering the current market, so I noted down some cars from Autotrader last August. These were the lowest price available of that particular model (under 50,000miles &<4years old). Had another look today for similar and found some dramatic changes in 6 months. I appreciate there are a number of factors at play, especially on any given day, but the changes on these two particular days are quite consistent.

Fiat Tipo 1.6 Multijet Lounge, 2017, 49026 - £7600. Aug21
Fiat Tipo 1.6 Multijet Lounge, 2018, 42936 - £9700. Feb22

Dacia Logan 1.5Dci ambiance 2017 35884 - £7,490. Aug21
Dacia Logan 1.5Dci ambiance 2017 27347 - £9250. Feb21

Vauxhall Astra 1.6CDTi Design 2017 47000 - £7487 Aug 21
Vauxhall Astra 1.6CDTi Design 2018 50000 - £9500 Feb 21

Kia Ceed 1.6CRDI 2017 40000 - £8250
Kia Ceed 1.6CRDI 2017 39810 - £9700
Click to expand...
Its baffled me too why prices have risen, if the pandemic meant more people were hanging on to their cars that means less transactions so its harder to sell so you drop the price? I don't get it
 
The chip shortage is down to a whole host of issues it’s not just covid but that has an impact as well.

Last 2 years saw a huge spike in demand for crypto currency, to “make” crypto currency you need a lot of computing power and as people rushed to buy the equipment to make crypto currency the prices went up and the availability went down.

Many people use power computer graphics cards to mine crypto currency but the machines to make these are highly complex and cost millions take months to build and get working and because of all the trust issues with China, they are band from selling these machines (made in America) to China and they are not allowed to share the design information with China. The Chinese can obviously make more simple chips but then these are being snapped up for other purposes in the crypto mining world.

The last couple of years saw a massive jump in the complexity of the chips as well meaning they get a much higher failure rate on new chips compared to the past.

Then because the complex chips go up in price, people will use their machines to make more valuable chips, leading to a shortage of more simple chips.

Then there has been the explosion in demand, cars need thousands of chips to make everything work across all their different modules and units, my kettle can be controlled with an app in your phone, the light bulbs in peoples houses are increasingly switching to smart devices, I saw a story about a digital pregnancy test recently that showed they use a chip more powerful than the one used in the Apollo missions just to read a line on a stick and display a smiley face…. Then it gets thrown away.

The demand for chips for literally everything has gone through the roof.

I picked up an item of clothing recently in a shop which had a nfc chip on the price label which can be used to ‘scan’ the item instead of a barcode, the till reads the chip in the tags.

It’s mad, it’s not going to get better any time soon demand is going up quicker than they and increase production.
 
@Popitinpete

Different perspective.

A lack of supply means people are paying more

Lead times on new order cars mean people are buying average miles 2 year olds for the list price of a new one.

The options of diesel and performance being pulled has also meant that people are keen to buy low mile examples of 'end of line' stuff

Ive sold 2 ancient multijets this year.. on ebay.. both found good interest.

A 2015 skoda lost no money on paper in 6 months of ownership.. car buying sites upped their valuations £900 in 3 months

Lousy time to upgrade - thats why I bought a 2018 500

Reasonable value..and I cannot wait 18 months for a good deal to arrive !!
 
varesecrazy said:
@Popitinpete

Different perspective.

A lack of supply means people are paying more

Lead times on new order cars mean people are buying average miles 2 year olds for the list price of a new one.

The options of diesel and performance being pulled has also meant that people are keen to buy low mile examples of 'end of line' stuff

Ive sold 2 ancient multijets this year.. on ebay.. both found good interest.

A 2015 skoda lost no money on paper in 6 months of ownership.. car buying sites upped their valuations £900 in 3 months

Lousy time to upgrade - thats why I bought a 2018 500

Reasonable value..and I cannot wait 18 months for a good deal to arrive !!
Click to expand...
Oh yes totally separate to chip shortages, people (myself included) are not buying new cars. Car prices have gone up this puts people off buying something newer, people are holding off because of the transition to electric cars so people are waiting to see if electric prices come down.

People who have bought brand new cars on PCP deals are finding their cars that is only going to cost £10k to pay off is still worth nearer £20k and they’d rather keep the car and have the choice to sell it themselves.

Then like you say many options are disappearing, new diesels are not about, to current diesel owners petrol cars do not meet their expectations in MPG and performance.

There are so many reasons people are holding on to what they have that what little pickings are about people are willing to pay a premium for.

Just paid off my wife’s Mini Countryman. They’re still selling for >£20k and it’s 4 years old the pcp payout less than £10k, replacing it with a new car would cost more than £30k so saved myself £20+k in another years time will it have lost or gained any more value? It might actually continue to go up despite increased mileage
 
Electric cars, COVID and the chips shortage is happening everywhere. So this doesn’t fully explain the massive rises in the U.K.

I suspect the hike in new car prices and PCP may well go some way to explaining things. Still doesn’t add up though. Panic buying is my bet.
 
Troubles with 500c said:
Electric cars, COVID and the chips shortage is happening everywhere. So this doesn’t fully explain the massive rises in the U.K.

I suspect the hike in new car prices and PCP may well go some way to explaining things. Still doesn’t add up though. Panic buying is my bet.
Click to expand...
Well it does because massive price rises in cars is also happening around the world not just the uk
 
To put it into perspective.. back in the days of people importing UK spec cars themselves

We didnt want a NEW car.. so thought we would buy a USED car in France

NEW prices were @15% lower than UK
USED prices were 20% higher than UK

In other words they had depreciation..and we were being ripped off
(The French market had no 'fleet market'.
So prices were pegged at what the public could endure... rather than our daft situation where a 20% discount from list was 'normal')

Chances are their situation hasnt changed much for them..
 
AndyRKett said:
The chip shortage is down to a whole host of issues it’s not just covid but that has an impact as well.

Last 2 years saw a huge spike in demand for crypto currency, to “make” crypto currency you need a lot of computing power and as people rushed to buy the equipment to make crypto currency the prices went up and the availability went down.
Click to expand...

Slightly off topic...but best thing we could do environmentally is switch off crypto currency. Which sounds ridiculous...but the environmental footprint of the power needed to mine bitcoin 3x that of New Zealand. All that to produce literally nothing..not taking into account other currencies.

Not even addressing the impact on microchip production and the actual mining of raw materials needed to make the chips etc.
 
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StevenRB45 said:
Slightly off topic...but best thing we could do environmentally is switch off crypto currency. Which sounds ridiculous...but the environmental footprint of the power needed to mine bitcoin 3x that of New Zealand. All that to produce literally nothing..not taking into account other currencies.

Not even addressing the impact on microchip production and the actual mining of raw materials needed to make the chips etc.
Click to expand...
You’re probably right, ain’t gonna happen as it earns too many people a lot of money. Certain countries where electricity is very cheap are where a lot of the crypto mining takes place also tend to be places like Kazakhstan where they use non renewable resources.

Then again if you understand the way crypto currency works the people “mining” the coins are basically processing all the transactions that everyone else was doing which means the whole process is incredibly difficult to hack and no government can suddenly print a ton of notes and suddenly devalue the currency, also there is a limit on a certain amount of the currency that can ever exist and some gets destroyed when transactions are made, and it gets harder and hard the older the currency gets to make new coins which results in a situation where the value will only ever go up.

I don’t see anyone switching it off any time soon.

Last year an unknown person dropped about $8k on shib ino and by the beginning of this year that investment was literally worth billions, so it’s the gold rush for the current time
 
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