Value of second-hand cars are going UP by 20% six months after they leave the forecourt

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The average second-hand car is increasing in value by 20% within the first six months of being sold, shocking figures have revealed. 

While cars are notorious for depreciating in value – usually by five per cent after leaving the forecourt – an unprecedented demand for used vehicles coupled with a chronic supply shortage for new cars has reversed the age-old trend.  

Experts have described the anomaly as a ‘once-in-a-generation development’.

It comes as commuters who moved further out of the cities due to the Covid-19 pandemic are now in need of a car to get to work, while white-collar workers who saved more than expected are looking to splurge on a new motor.  

But the new demand has been met with a global shortage of semiconductor microchips, which are essential for the operating systems of all vehicles.

It means there is a shortage of new cars being manufactured, leading to an unprecedented demand for second-hand models. 

As a result, an investigation by The Times found the price of some cars rose by almost £10,000 in the space of five months and continued to increase. 

‘What we are seeing here is absolutely unprecedented — a once-in-a-generation development that is turning the rules of car valuations on its head,’ Derren Martin, head of valuations for Cap HPI, a vehicle valuation service, said. 

While motors are notorious for depreciating in value – usually by five per cent after leaving the forecourt – an unprecedented demand for used vehicles coupled with a chronic supply shortage for new cars has reversed the age-old trend (file photo)

Britain's Society of Motor Manufacturers and Traders has cut its forecast for new car registrations for 2021 by 24 per cent, from 2.4 million to 1.8 million (file photo)

Britain’s Society of Motor Manufacturers and Traders has cut its forecast for new car registrations for 2021 by 24 per cent, from 2.4 million to 1.8 million (file photo)

‘Second-hand cars are appreciating, rather than depreciating, in value.’ 

The semiconductor microchips needed to make new cars have been in short supply due to Covid-related closures in factories from Turkey to China.

The same chips are also used in PlayStation and Xbox gaming consoles, which have been bought in record numbers for children confined to their homes during global lockdowns, only adding to the supply shortage. 

Britain’s Society of Motor Manufacturers and Traders has cut its forecast for new car registrations for 2021 by 24 per cent, from 2.4 million to 1.8 million. 

Last month, it reported the worst July for UK automotive production since 1956. 

It comes as a study by Cap HPI showed how 52 six-month-old vehicles with 5,000 miles on the clock gained in value significantly compared with when they were brand new.

The analysis found a second-hand Dacia Sandero was typically being advertised for £12,398, significantly higher than its average new price of £10,172.92. 

A a study by Cap HPI found that a typical second-hand Toyota Yaris GR (pictured) was being advertised at £35,967 compared with its new price of £30,963.33

A a study by Cap HPI found that a typical second-hand Toyota Yaris GR (pictured) was being advertised at £35,967 compared with its new price of £30,963.33

The analysis by Cap HPI found a second-hand Dacia Sandero was typically being advertised for £12,398, significantly higher than its average new price of £10,172.92

The analysis by Cap HPI found a second-hand Dacia Sandero was typically being advertised for £12,398, significantly higher than its average new price of £10,172.92

A Toyota Yaris GR, meanwhile, was being advertised at £35,967 compared with its new price of £30,963.33.  

According to the Times, Renault in Wolverhampton is advertising a Dacia Sandero 1.0 Comfort, manufactured this year and with 159 miles on the clock, for £13,450 — more than £2,000 above its new price. 

Elsewhere a Toyota Yaris Hybrid 1.5, manufactured this year with 3,040 miles on the clock, is listed at Stephen Eagell Toyota in Milton Keynes for £23,225. Its original cost as new is £21,740.

Car magazine Parkers reported some second-hand cars gaining almost £10,000 in value within five months of being sold.   

Car magazine Parkers reported a Mazda MX5s soared from £13,395 to £18,995 after five months of being sold, representing a 41.8 per cent jump

Car magazine Parkers reported a Mazda MX5s soared from £13,395 to £18,995 after five months of being sold, representing a 41.8 per cent jump

Parkers' analysis showed that a second-hand Toyota Auris hybrid had risen, on average, from £9,895 to £14,095 - or by 45 per cent.

Parkers’ analysis showed that a second-hand Toyota Auris hybrid had risen, on average, from £9,895 to £14,095 – or by 45 per cent.

It looked at three-year-old cars that had 40,000 miles on the clock and compared their forecourt prices today with their value on February 1. 

The analysis showed that a second-hand Toyota Auris hybrid had risen, on average, from £9,895 to £14,095 – or by 45 per cent. 

Meanwhile a Mazda MX5s soared from £13,395 to £18,995, representing a 41.8 per cent jump.  

The cost of a monthly finance plan, however, which sees drivers pay for the car in instalments, has remained stable, as they are calculated by projected values in four years’ time – although experts believe that a correction could come before then.  

Russ Mould, investment director at AJ Bell, the wealth manager, said: ‘Ultimately the best cure for high prices is high prices. Eventually they will reach a level where buyers decide there isn’t enough value on offer for them to justify a purchase.’

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