2020 was a testing year for the automotive industry. With so many of us locked down, and therefore unable to travel anywhere, there’s been little need to buy a new car – even if it’s a used one. But how has the industry fared since the restrictions were lifted, and life began to return (more or less) to normal?
The short answer is that there have been a number of changes, designed to foster demand while restrictions on social mixing were in place, which look set to become mainstays in the way that we shop for, buy, and drive our new cars.
If consumers are artificially prevented from spending money, then it follows that they’ll head out in their droves to make purchases once those restrictions are lifted. Sure enough, in April 2021, sales of new cars rose by around 3,000% from a near-standing start.
Moreover, we should consider that many would-be buyers have had more time to save money while lockdown has been in effect. According to ONS figures, households were saving around 19.9% of their total disposable income during the lockdown.
The used market has benefitted from this post-pandemic boom, in much the same way as the new market. This effect is being driven not just by the demand side, but by supply. During lockdown, fewer motorists than ever were actually selling their cars. Consequently, according to used dealer Fords of Winsford, “car stock is down 20% in volume compared to this time last year.” The study from Fords also found that in September alone used car prices increased by 5.9% in comparison to August.
Consumer uncertainty is another factor that’s encouraging motorists to look for a second-hand alternative. Given that so many of us are uncertain about the future of our employment in the short-term, and that so many of us are reassessing our options for the long-term, it’s no surprise that we might look to reign in spending by looking for an economical, second-hand choice.
Also driving the push toward the used market is a lack of supply in the new market, which has come largely as a consequence of global supply chains being disrupted, not only by covid-19, but by things like the silicon shortage, which has limited the ability of many manufacturers to produce the essential electronic components that make a modern car run. This effects not just high-end models with advanced new features like braking and lane assist, but just about every new car produced today.
Finally, we should consider environmental concerns, which are shaping consumer decisions in just about every area of life. We saw this reflected in a 186% rise in electric car sales in 2020. Given that the environmental cost associated with a new car is fairly considerable, we might see green-conscious consumers opt to go second-hand.
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