ChooseMyCar has revealed car prices in the UK are set to dramatically plunge in the new year.
The car finance specialists are advising those who are considering purchasing a car to be aware of the predicted drop in value.
The second-hand car market has seen record prices in 2021, due to a huge downturn in the availability of new cars caused by the global pandemic and delivery issues.
New car sales are down 44.7% compared to the 10-year average, said to be the weakest September since 1998, a year before the two-plate system was introduced.
But now, the combined effect of the pandemic and the impact this may have on jobs and disposable cash, alongside mounting fuel prices, reportedly means that many consumers are holding back on car purchasing decisions.
ChooseMyCar has predicted a market correction of second hand prices that will reportedly see prices plunge dramatically in the new year.
Nick Zapolski, Founder of ChooseMyCar.com said that various factors are in place that creates the perfect storm for drastically falling values of second-hand cars. Soaring fuel prices are eclipsed by huge energy hikes – predicted to continue to rise more than 30% in 2022 – are causing people to think twice about major spends.
On top of this, the holiday season is approaching and with so much uncertainty around the pandemic and delivery issues in the UK, many people will reportedly choose to prioritise Christmas over car buying.
Nick explained: “In my opinion, we’re smack bang in the middle of an automotive mini-recession! The threat of yet another lockdown and potential job losses, combined with huge increases in not only car fuel but energy bills, means that many people are taking a pause on making the decision to buy a car. Even when they do decide, vehicle pricing sites are behind the curve when calculating residual values, meaning consumers are finding it harder to finance cars without having to contribute bigger deposits.
“Used cars prices are artificially high due to lack of stock filtering through new car sales, due to shortages of the semiconductor chips. Just yesterday Volkswagen owned Skoda said it will make about a quarter of a million fewer cars this year due to a shortage of chips. It said it expected the chip shortage to stabilise in the next few months and gradually ease in the second half of 2022. Last week Jaguar Land Rover was forced to shut down car production at Halewood amid a chip shortage. When chip production gets back on track, we will see the return of new cars entering back into the market and this will refresh used car stock levels.
“The ridiculous fuel prices are also convincing many people to look at electric vehicles. We’re seeing an increase of 37% on searches for electric cars on Choosemycar.com with our recent research showing that 25% of people are more likely to look to buy an electric car as their next car due to fuel costs.
“All of this together leaves consumers very confused and uncertain as to what to do. The result is less purchasing, less demand, and therefore less value on used vehicles. We’re predicting a huge drop in prices next year – so consumers should be aware of this before getting their wallets out.”
