If you need a new run-around and want to save money by going for a used car, you might be surprised to hear that the price of used cars is more than you thought. Here’s why.
EASY AS HACK
Used car dealers expect to haggle a little. Be sure to research the car you’re interested in and equivalent models, so you feel informed and confident when agreeing a price.
At a glance
- Used car prices have been steadily rising for over three years because of a shortage of parts
- However, the price of used electric cars has been falling and they may offer more value
- There are simple things you can look for to find a reliable used car for an affordable price
Why have used car prices risen so much?
Used car prices grew for the 40th month in a row in July 2023, with the average used car costing £17,920 [1], 2.4% more than in July 2022.
One of the main reasons for the rise in the price of used cars is the shortage of new cars available. Anyone who wants to buy a new car is more likely to turn to the used car market to avoid long waiting times.
The AutoTrader website was visited 79.2m times in July 2023, up by more than 16% compared to July 2022 [2]. Meanwhile, the number of available used cars fell by 1.5% (in July 2023), it’s a familiar story which has driven up prices for a while now [3].
But why are fewer new cars being made? It all comes down to microchips, the small parts found in infotainment systems and digital dashboards have been in short supply since 2020 when lockdowns forced factories to close and demand outweighed supply. Because there are fewer microchips, fewer new cars are being made.
The good news is, microchip production is on the up and should return to normal levels soon [4].
Drivers living in and around cities with a ULEZ zone might also have noticed a bigger spike in the price of used cars since the expansion of the
The average cost of a diesel car that’s not affected by ULEZ is £19,991, or £15,000 for an equivalent petrol car [5].
How to save money on a used car
There are plenty of things you can do to get a good deal on a used car. Use our Easy As tips to make sure you and your wallet can drive home happy.
1.Do your research and ensure you get value for your money
If you want to buy a new set of wheels that won’t break the bank, we’ve gathered some of the best-value models on offer. Take a look and see if there’s a car that works for you.
2.Get the best price for your old car
Everyone wants to sell their old car for the best possible price, a good way to find out what it’s worth, is by using sites like Parkers and AutoTrader. You don’t have to sell your car through their websites and might want to think about selling it privately to get more money.
3.Find out how much insurance will cost
Car insurance costs can vary, even for similar vehicles – so when you’re looking for a car, be sure to get a quote for insurance before you sign on the dotted line.
4.Get a used-car valuation for the car you’re seeking
Use an online valuation site, such as Auto Trader, to get an approximate valuation for the used car you’re thinking about buying – this will put you in a stronger position when it comes to agreeing a price.
5.Be flexible
It’s easy to get your heart set on a particular car. But the thrifty car shopper is flexible and prepared to shop for less popular models to save money. Don’t be afraid to do the same.
6.Haggle
It can feel unnatural to some of us, but haggling can really make the difference when buying a used car. Set yourself a budget and try and barter under that figure to give you room to meet a seller halfway, so everyone’s gets a good deal.
7.Go electric
Contrary to the petrol and diesel market, used electric cars have actually fallen in price. Last year, the price of a Tesla Model X fell by almost 30% – more than any other type of car.The luxury SUV had an average asking price of £49,589 in July 2023. Meanwhile the average price for an Audi e-tron fell by nearly 27% to £40,541.At the more affordable end of the market, the average price for a Renault Zoe dropped by 29% to £14,483 [6].
However, it's important to check the battery life on electric cars, as this could be an additional cost you’ll need to factor in.
If you really want to make a saving in the used car market it might be time to ‘go electric’.
Car insurance is essential for cars both old and new.
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[1] https://plc.autotrader.co.uk/news-views/press-releases/growth-run-adds-4-000-to-value-of-second-hand-cars/
[2] https://plc.autotrader.co.uk/news-views/press-releases/growth-run-adds-4-000-to-value-of-second-hand-cars/
[3] https://plc.autotrader.co.uk/news-views/press-releases/growth-run-adds-4-000-to-value-of-second-hand-cars/
[4] https://www.jpmorgan.com/insights/current-events/supply-chain/supply-chain-chip-shortage
[5] https://www.thisismoney.co.uk/money/cars/article-11889277/How-Sadiq-Khan-helping-drive-cost-second-hand-cars-price-ULEZ-friendly-motors-soar.html
[6] https://plc.autotrader.co.uk/news-views/press-releases/growth-run-adds-4-000-to-value-of-second-hand-cars/
Original article written 29th March 2022, updated 6th September 2023
