Why your used Ford Focus can be worth more than a new one | automotive industry

It used to be argued that only classic cars were an investment, but now the same is true if you own a Ford Focus.

Shifting used motorbikes is now a “nice little income” as Cockney wheel dealer Arthur Daley would put it on the TV show Reminderwith prices soaring 30% last year thanks to a persistent shortage of computer chips that hamper new car production, according to figures from the Motorway website.

And last month one in six near-new cars (up to 12 months old) priced higher than the new version, separate data from Auto Merchant market show.

Traditional auto rules, including that cars start to lose value as soon as you drive home from the dealership, are no longer in effect as the supply of new cars dries up, said Motorway chief executive Tom Leathes. “The numbers have reduced massively,” he said. “The biggest reason is the shortage of chips, which means it’s very difficult for automakers to produce in any volume, so there’s a huge waiting list.”

As a result, Motorway data shows a large increase in the value of used popular models such as the Ford Focus. Last month, the Focus average, driven by Microsoft founder Bill Gates and singer Lily Allen, sold for £13,309 on the site, which is £3,346 – or 34% – more than a year ago. The value of a Nissan Qashqai, another family option, has increased by almost a quarter, to £11,525.

Data last week from the Office for National Statistics showed that used car prices rose by more than a fifth since April, fueling inflation at a time when many Britons are worried about their household finances.

Rising costs of buying a car aren’t the only pressure motorists face because, after panic buying that vacated the country’s front page, fuel prices are near record highs.

Arthur Daley (George Cole), a used car dealer at ITV’s Minder, will appreciate the soaring price of used cars. Photo: Fremantle Media/Shutterstock

Leathes said the shortage of new cars meant people who typically bought new cars were opting for used cars, adding: “That means there is more demand for used cars than ever before, and there are fewer of them, especially items that are nearly new, so that causes prices to rise significantly. We are in unprecedented times – used cars are usually a depreciating asset.”

The pressure was highlighted by industry data showing falling new car sales. Just 215,000 new cars were registered last month, the lowest figure since 1998. That figure is down by a third even in a weak 2020, when Covid restrictions are hampering buying and selling, and down nearly 45% on the 10-year average before the pandemic.

With soaring prices for used goods, Auto Merchant figures show that in September one in six nearly new cars cost more than the new version.

The industry’s broken supply chain means the average lead time for a new car is between four and six months, but up to 12 months for models like the Land Rover Discovery Sport. Last week Jaguar Land Rover’s Halewood factory in Merseyside was forced to temporarily close due to a chip shortage.

“There are always over 100,000 cars in the UK at any time that consumers can get with almost immediate delivery,” explains Ian Plummer, Auto Merchantcommercial director. “No one knows what that number is right now, but based on the evolution of the new cars available in Auto Merchant over the past six months or so, it’s probably dropped by two-thirds.

Demand is high as consumers want to buy or upgrade their vehicles using the money saved during the lockdown, or when they switch from public transport to get to work.

“I don’t think a lot of people in the industry think a 12-month-old car will sell for a higher than equivalent price,” said Plummer, adding that the rate of growth in second-hand prices was still picking up. Figures for the week before last showed the average used car price was 23.9% higher than a year ago, with Plummer adding: “At some point it should start to fall but at this point the underlying driver of the situation is nothing more than the simple economy.”

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