Bizarre: In UK, price of used cars higher than new ditto models. Here's why
Would you pay more for a pre-owned vehicle if the exact same vehicle in brand new condition costs you less? Before you relegate this query as outlandish, pause, because that's exactly what is happening in the UK. Some passenger vehicles in the pre-owned market are fetching higher prices than these would in a showroom and in mint new condition because the global shortage in crucial semiconductors had thrown the market off gear.
The semiconductor shortage has resulted in supply disruptions across the world. Those absolutely desperate to drive home in a ‘new’ vehicle are now opting to tap the pre-owned car market where prices have jumped up in recent weeks. According to a report in the Daily Mail, many of these models in the second-hand market are commanding a price that is up to 19% higher than the price sticker in showrooms.
This unprecedented trend has made it a jolly good time for dealers of second-hand vehicles in most parts of the country and is cutting across vehicles belonging to several segments. Take the example of Dacia Sandero. A new version of the car has already been launched and where available, can be purchased for around 9,780 pounds. But it is reported that the average sale value of the model in the pre-owned market is now around 11,680 pounds.
Even the Duster SUV models in the pre-owned markets are commanding a premium of 1,000 pounds over the list price of the new vehicle. It is also now more expensive to buy more premium offerings in many parts of the UK. Cars like Porsche Macan and Range Rover Evoque are fetching better prices in the used car market than in showrooms.
The same report takes inputs from automotive trading bodies to highlight that while demand for used cars had been on an upward trajectory since the Covid-19 pandemic began, the chip crisis has further bolstered prospects.
Demand for passenger vehicles has gone up manifold in many parts of the world but supply has been a major roadblock due to the shortage in the electronic components. Many OEMs have reported production hits and are struggling to keep up with demand. And with no solution or respite in sight, buying a new car may be all about patience in the times to come, unless of course, you can increase your budget for a pre-owned vehicle!