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The price of used cars shot up by almost a third last year, leaving one in four models more expensive than their new equivalents. A global shortage of computer ships has forced car makers to slow production and left buyers waiting up to 12 months for some models.
That has encouraged many to opt for vehicles that are less than a year old, according to Auto Trader. The average price of a used car jumped by 30.5pc to £17,816 in December, marking the 21st consecutive month of increases.
Price increases are being led by more spacious vehicles such as the Seat Alhambra people carrier, for which the average asking price has risen from £15,130 to £19,038.
The Renault Grand Scenic is up by about a fifth to £10,152, while the Skoda Octavia now costs £16,826, about a third higher.
The increase in used car prices also reflects a desire to avoid public transport to limit potential exposure to coronavirus as well as the production slowdown.
Auto Trader said a third of its customers believed owning a car was more important now than before the pandemic struck.
Richard Walker of Auto Trader said: “The two main factors fuelling this growth, supply constraints and strong consumer demand, both show no signs of easing anytime soon. Claims of an imminent ‘bubble burst’ are failing to take these key dynamics into account.”
UK car manufacturing slumped to a 37-year low in November, down 29pc, according to the Society of Motor manufacturers and Traders, as producers struggle to obtain the computer chips needed to make their cars.
Car makers produced just under 800,000 cars in the 11 months until November 30, down from a peak of more than 1.7m a year five years ago.
The slump in production has been felt across the world with fewer vehicles being made by most factories as they await a return to normal chip supply, which is expected later this year.
The disruption was caused by a slowdown in manufacturing towards the beginning of the pandemic. That is still being felt as semiconductor makers prioritise more profitable chips used in computers and phones rather than cheaper versions used to control everything from windscreen wipers to electric windows.
Only upmarket carmakers such as Bentley and Rolls-Royce escaped the squeeze, being able to pay more for components than their mass-market competitors can justify.
The rise in prices has led to a boom for car dealers. Lookers, one of the UK’s largest, is set to post a record profit, led by margins on new and used vehicles, it said last week.
Sales have held up at both ends of the market, with strong interest from the wealthy, who have spent their lockdown savings on fancy cars when holidays were not an option.
HR Owen, a Chelsea-based dealer of Aston Martins, Lamborghinis and Rolls Royce, reported pre-tax profits of £13.7m for the year to June, far higher than the £1.9m for the previous 12 months.
Auto Trader itself posted record first-half profits as buyers searched for cars and dealers joined their network to access a national marketplace. Its revenues leapt 82pc to £215m while profit more than doubled to £151m.
The company floated in 2015 and is now in the FTSE 100 with a value of about £6.7bn.