The UK has seen steady growth in the purchase of used cars. With the sales increasing by 108% in Q4 2021, the volume of transactions stands at 2.16 million.
Within the second-hand car market, vehicles aged between 2-3 years old are experiencing the biggest increases in demand. Vehicles of this age have passed their high rates of depreciation that new cars experience but are still relatively new and this equilibrium has lead to a sharp rise in demand and as a result, the number of used cars sold in the UK stands at 3.2 times more than the new cars sold.
Let us unravel what could be the reason for such a high volume of second-hand car purchases.
- Better value for money: High depreciation rates of the newly purchased car makes them unappealing to many, a £21,000 car, when leaving the forecourt will lose around £4,000 in value instantly. Second-hand cars will also depreciate, but at lower rates than the ones driven off the forecourt for the first time.
2. New Vehicle lead Times: The car industry has suffered greatly from the worldwide ship shortage. Lead times on new vehicles can be up to a year. This sharp decrease in supply means that many people have opted to get a used car.
Factors to look into when purchasing a used car
- Price: While purchasing a used car in the UK, we must keep a track of the price trends. The price has seen a surge, thus the growth reaching more than 30% on a Y-on-Y basis. Yet, the average price of a used car in the UK is half of the annual salary.
2. MOT test: an MOT test is an integral roadworthiness test for every vehicle on the streets of the UK. Though the results depend on the manufacturer, close to 35% of cars fail the MOT test on the first attempt. Purchasing a good quality used car from a trusted supplier means that you can be confident that it has passed the MOT test and save you any unexpected issues in the near future.
3. Warranty of the vehicle: It’s important to check if your secondhand car comes with a warranty from wherever you are buying it from. The last thing you want is for your car to be breaking down a few weeks after making the purchase and having to cover the costs yourself. Reputable dealers should always offer a warranty with the vehicle.
4: The Condition of the Vehicle: Before you zero down on the purchase, make sure that you take a test drive of the car. Moreover, if you find any issues, you should point them out as early as possible. While making the final purchase, we suggest you take a test drive again, to ensure that nothing has changed since first viewing the car.
Bottom line: Though there could be many more checks before you buy used cars, the above should be at the top of your list.
