The coronavirus pandemic has hit every industry in one way or another, but one industry that has been hit hard is the automotive industry. So, how have car sales fared during this difficult period?
Car Sales Soaring
Car sales are soaring right now with used cars having 5 years worth of growth in just 6 months. It is thought that the reasoning for this growth is the fact that there is a lot of pent up demand from the pandemic with lockdowns stopping people from buying used cars and people not willing to make big-ticket purchases in times of uncertainty. In addition to this, people’s motoring needs have changed during COVID with many people now driving less than before due to remote work- this does mean that car insurance prices have fallen and now could be a good time to shop around for a car insurance deal.
Car Prices Increasing
This surge in demand has also seen the price of cars rise with used cars being a third more expensive compared to 2021. Dealerships are struggling to replenish stock due to the increase in demand, which is partly due to the global chop shortage that has been limiting new car production and will continue to be an issue for some time.
According to Auto Trader, the price for like-for-like used cars has risen by an eye-watering £4,000 compared to a year earlier with the average second-hand vehicle now costing £17,816 with prices rising by as much as 30.5%. With a lack of new cars available, nearly new cars have seen the biggest increase at a mammoth 45% compared to 2019 reaching an average of £34,429.
New Car Prices Rising
Prices are rising for new cars as well with the “Carflation Study” revealing that new car prices are rising 5x faster than the UK’s average wage. Those looking to buy new may find themselves in for a shock when they look at the prices and it is easy to see why many are turning to the used car market.
Why Prices Are Soaring
The chip shortage along with a global shortage in cobalt, aluminum and copper is impacting new car production and driving the prices up as demand surges while supply dwindles. This is leaking down into the used car market with supply struggling to keep up and pushing the prices up.
Clearly, car sales have been affected heavily by COVID-19 as the demand for used and new cars is high but there are still major issues in terms of supply.