With news out last week that UK car production in 2022 hit a 66 year low we look at how this is affecting the UK used car market and ultimately what it means for car buyers.
What happened in 2022?
The trade body for automotive manufacturers, SMMT announced that in 2022 775,014 cars were built in the UK. This is down almost 10% compared to 2021 and over 40% lower than 2019 (pre-Covid). SMMT said this was due to the closure in mid-2021 of the Honda car plant in Swindon and the Vauxhall Astra now being manufactured overseas. The ongoing shortage of microchips, which run modern vehicle systems, continued to hamper production. 80% of the cars produced were exported to other markets.
Global full year car production figures have not yet been released. But a state of the industry report published in November by European auto trade body, ACEA said that 50 million cars were produced globally by the end of September 2022. This was up 9% on the same 9 month period in 2021 but down 5 million on pre-Covid levels.
How is car production affecting the UK car market?
It is keeping UK used car prices high overall. Auto Trader’s December market analysis showed that the average retail price of a used car was £17,548, up from £15,204 in 2021 and £13,538 in 2020.
Drop in demand down to seasonal factors rather than cost of living crisis
There was a drop off in demand towards the end of 2022. This has not however been put down to the cost of living crisis because car sales were turned around quickly, but in less numbers. Seasonal factors are likely to be at play, where consumers buy less cars in the lead up to Christmas.
Low car production keeping prices high regardless
The lack of new car supply since the pandemic is the primary reason why prices remain high. There continues to be reduced availability of both new and 1-3 year old cars in 2022. For some models prices of used cars were above their new car price in 2022. Supply of older 3-7 year old cars was higher leading to a softening of prices in some categories. But these older vehicles remained more expensive than the pre-2020 prices.
How does UK production of cars affect UK car buyers?
The UK car buyer market is mostly affected by global car production. 80% of cars produced in the UK are exported. Less than 50 new car models on the market are manufactured in the UK, of which many are not your average run around (think Bentley, Aston Martin, Jaguar Land Rover). SMMT reported that 168,176 vehicles were built in the UK in 2022 for the UK market. This is only 10% of the 1.65 million new cars alone that were registered in 2021.
In comparison over 400 car models are manufactured globally. As the figures above suggest, global car production was relatively higher than the UK’s in 2022. But there are over 5 million vehicles less being produced globally each year than before the pandemic.
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People are checking older vehicles
When comparing the initial vehicle checks our users made in 2019 against those made in 2022 there has been a noticeable shift towards interest in older vehicles. Over 75% of initial Total Car Checks undertaken in 2022 were of vehicles 8 years or older, compared to 68% in 2019. This is based on 42.7 million checks being undertaken in 2022 and 28.8 million in 2019. This very much supports the trend that car buyers have been considering older models when researching their next car purchase.
Interest in used electric vehicles grows strongly but from a low base
The number of Total Car Checks undertaken on used battery electric vehicles (EVs) in 2022 was four times higher than in 2020, doubling each year between 2020 and 2022. We are the first UK vehicle check provider to give users EV specific data within our free initial check. This covers information on battery power, charge time, charger type and charge costs. Click here to check.
What’s happening in the UK EV market?
Many car buyers have until fairly recently rejected the idea of owning a used EV. EVs are more expensive than their petrol or diesel equivalents and there remain questions regarding their reliability and practicality. The EV charging infrastructure still has a long way to go to enable customers to recharge a vehicle away from home as easily as at the petrol pump.
Demand for EVs has waivered a little in recent months. With manufacturers dedicating their production efforts towards electric, this has generated an abundance of stock. Over the last 6 months the values of some EVs fell by as much as 25%. In the last two-months EVs have lost value four times faster than petrol/diesel models, according to the valuation agency cap hpi.
Regardless of these recent issues the future very much is still electric. A fall in the prices of used EVs will make them more accessible to a larger section of the car buying public. We may therefore see an increase in demand for EVs throughout 2023, so long as confidence in the technology and infrastructure is restored.