Used car shortage will last until 2024, warns Auto Trader Business

Used car buyers are facing years of shortages amid China’s Covid lockdowns and a shortage of microchip hammer makers, Auto Trader has warned.

The company said a global shortage of semiconductors, which are a crucial component in vehicle manufacturing, has led to a lack of new cars, prompting a rush among drivers to buy second-hand models.

He added: “Furthermore, the current shortage of new cars is likely to lead to a reduction in the stock of used cars in the years to come.”

The average stock of cars on the Auto Trader site fell 11% to 430,000 in the year to March 31 from a year earlier.

The online used car retailer said demand for used motors nearly doubled profits to £301m in the same period, with revenue jumping 65% to £433m sterling.

Profits were also 20% higher than in 2019-20, before the pandemic hit.

A shortage of new cars has had a knock-on effect on used prices, with Auto Trader’s used car price index recording a 22% year-over-year increase.

Auto Trader warned that the price rise is likely to last until at least 2024.

Nathan Coe, managing director of Auto Trader, said: “In a more normal market, used car prices would drop month to month depending on the level of depreciation. I think the reality is that while we’re still facing supply chain disruptions due to the lockdown in China, the war in Ukraine, and shortages of semiconductors, we’re still seeing demand outpace the offer.

The result will be that drivers will keep their cars for longer, he added, which is easier today with more reliable models available that can last more than a decade on the road.

Automakers are also posting record profits, with prices for new cars rising about 15% over the past year, according to analysts at Swiss bank UBS.

Most automakers expect the chip shortage to ease in the second half of the year, allowing them to ramp up production, which could dampen price increases.

But manufacturers said they found the higher margins helpful in building up the reserves they needed to fund the multibillion-pound programs they needed to electrify their production lines and build dozens of new battery factories. , replacing their engine factories.

Mercedes has announced its intention to reduce its offer of mid-range cars to focus on higher-end, more profitable models.

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This notice was published: 2022-05-26 18:29:53

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