Car advice: Buying a used car? Our expert explains why prices are so high – and when they might fall

As prices soar, our auto editor guides you through what’s happening in the used car market.

Why are used car prices so high right now?

There are a number of factors at play in the used car market right now, but one of the most important is a consequence of the Brexit deal.

When you import a car from the UK you now have to pay VAT and in some cases customs duties of 10 per cent, making importing far less attractive. As a result, imports are down 34.4 percent and nearly 60 percent this year compared to 2019. In addition, the global shortage of chips is causing delivery problems for new cars. Production levels had been expected to improve towards the end of the year; However, the war in Ukraine is contributing to supply chain problems.

All of these factors, combined with rising consumer confidence and high post-lockdown spending, have pushed used car prices higher

Can we expect falling prices?

It is likely that used car prices will remain higher than before Covid-19. However, although the supply problems will not be solved in the foreseeable future, the current pressure on personal finances will lead to lower demand, which could lead to the beginning of price stabilization.

What does all this mean for me if I want to buy a used car?

The prices of all used cars have risen significantly in the wake of Covid-19, so whatever you buy you are now paying more for it than you were 12 months ago. However, not all makes and models have increased at the same rate; Rising fuel prices are increasing demand for electric and hybrid cars, so prices in this segment are rising faster.

My PCP contract is about to expire. How will used car prices affect this?

Anyone approaching the end of a PCP contract is in a good position. A guaranteed future minimum value (GMFV) represents what the car will be worth once the PCP ends. Given the current situation, the actual value of the car is likely to be well above what was forecast at the start of the contract. For example, your GMFV might be €10,000, but the car is actually worth €13,000, giving you €3,000 in equity​​​​​​​​

top tip

Used car prices are also driving up rental car prices; Rental car companies are struggling to replace their fleets as car prices rise and manufacturers prioritize customer deliveries.

Email Car advice: Buying a used car? Our expert explains why prices are so high – and when they might fall

Fry Electronics Team

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