words Al Woods
It’s an interesting question; the ongoing COVID-19 crisis has upended so much of what we used to take for granted in our lives, causing untold human tragedy and economic damage that is by no means over yet.
On that backdrop, asking what the pandemic means for used car prices might seem almost frivolous – but there is a very serious side to this. Memories of the first UK-wide lockdown are still fresh in many people’s minds, and at the time of typing, Prime Minister Boris Johnson has just announced new nationwide restrictions for England.
One might expect prices to have increased… or decreased
Before glancing at the statistics, there are various theories one might have for why used car prices in Britain may have gone up or down since the coronavirus outbreak first gathered serious steam in this part of the world in the spring.
On one hand, in circumstances of many people being forced to stay at home, amid uncertainty about their jobs, you might not have imagined that great numbers of us would have been thinking about investing in a car since the pandemic hit.
But another way of seeing the situation is this: public transport necessitates many of us crowding into a compacted space with what may be significant numbers of complete strangers.
Even with all of the usual precautions such as mask-wearing and social distancing followed, it’s understandable why many people may be anxious about that situation, and therefore eager to buy themselves a car – and with it, the peace of mind of some personal space on their commute.
So, what do the statistics say about COVID-19-era used car values?
Intriguingly, it looks like the coronavirus pandemic has so far exerted largely upward pressure on how much is being charged for used cars in the UK, with the second aforementioned theory ringing truer than the first one.
In fact, statistics cited by a Financial Times report in early October indicated a steep rise in used car prices in the UK pretty much as soon as lockdown began, a trend that continued once brick-and-mortar car dealerships reopened in the summer.
According to these figures, used car prices were 7.6 per cent higher in September 2020 than they had been 12 months earlier, with this representing the fifth month in a row of rising prices.
The newspaper’s global motor industry respondent, Peter Campbell, suggested that several factors drove this change, including wariness about public transport – especially in light of the Prime Minister’s own early advice to avoid using it – as well as many buyers’ apparent desire to acquire a cheaper second or third vehicle to complement their existing family car.
But if you’re wondering whether such momentum is likely to be sustained over the next few months, the answer might well be… no.
That’s at least according to the UK’s biggest valuations and forecasting company, Cap HPI. The firm reported a 2.1% fall in average used car prices in October, with Derren Martin, its head of valuations UK, commenting: “The market appears to now be undergoing some realignment.”
He added: “There are several factors at play. Values do tend to drop in the final quarter of the year, by varying degrees, as demand drops away in the run-up to Christmas and supply levels usually increase.”
Disheartened by rising prices? All is not lost!
With the spread of the virus itself and associated national and local efforts to contain it proving difficult to predict even on a week-by-week basis, forecasting the likely future direction of the UK’s used car prices will also be notoriously tricky.
Understandably, if you’re in the market for a used car right now, you might understandably feel disillusioned by the recent stark price rises that may be pricing you out of the vehicle you desire.
The good news is that even in the current climate, it’s still perfectly possible to get a great deal on a used car – not least by negotiating well, as the Money Advice Service explains.
It’s also worth bearing in mind that many car finance brokers, such as Car Finance Genie, exist that maintain strong relationships with dealers and may enable you to secure the car you want with the help of an attractive hire purchase (HP) or personal contract purchase (PCP) deal.
At this time when so much else remains uncertain, you might understandably decide to take the ‘safe option’ – for both your health and your transport needs – of purchasing a used car. And even after the price increases we’ve seen this year, there are still plenty of alluring deals to be had on vehicles across all manufacturers and categories – from city runabouts to luxury SUVs.