A lot of people are interested in what could lie ahead for used car prices. Buyers, sellers, dealers, and car brokers will all be keeping a close eye on them. However, the current situation makes predicting a rise or fall in 2023 impossible. It could go either way because there are so many different variables.
Is a rise possible?
The last three years have been incredible for used car prices. They have gone up almost consistently in that time. In 2021 values were up by 15%. Then, 2022 was an even stronger year, adding another 19%. At the start of 2023 there was a small increase again. Auto Trader said it was 0.2% in January and 1.3% year on year in February.
Further rises in 2023 are definitely a possibility. The main driver is there is still a shortage of quality second hand vehicles. Estimates are that as many as 2 million vehicles are missing from the market. This comes because of a combination of a drop in manufacturing new cars and people holding on to vehicles for longer. With the latter, there have been fewer lease returns.
Could a drop happen?
Traditionally cars depreciate in value every year. It happens because of mileage building up on the clock and wear and tear. People generally expect to pay less as vehicles get older because they anticipate more problems and repair or maintenance costs. Typically the vehicles would lose 3-5% each year.
We have not seen that kind of fall in value overall in the last few years. However, some are predicting that the growth has to stop at some point. Things like increases in interest rates will have an impact. Plus, there will be a time where buyers are no longer willing to pay such high prices because buying new will be more attractive. Therefore, a drop could happen in 2023.
Will prices be flat?
The most common prediction with many dealers and car brokers is prices will be flat this year. What it means is they may not have the same kind of huge increase we saw in 21 and 22. At the same time, they may not return to normal depreciation levels.
There are two things that can change prices; a boost to supply and or a drop in buyer confidence.
It is unlikely there will be a big change in supplies, even with manufacturing picking up. The issue here is that won’t have an immediate impact on the second hand market. It can take 2-3 years for these models to become available.
A massive drop in demand could occur, but is unlikely. Recent disruption with public transport due to strikes makes private car ownership more attractive. Rising interest rates may also not be enough to stop many people who want to buy.
Anything can happen
So, any of the three possibilities could occur in 2023. We could see used car prices continue to rise, start to decline, or be flat. It will be interesting to see what does happen and the impact it has on the market.
Would you like to join the UK’s car brokers?
At Auto Car Brokers we want to give people the chance to earn a great income from the second hand car market in the UK. What we do is help with setting up broking businesses. As a broker you have the chance to find vehicles for dealers and buyers. You will get a commission for every deal you help facilitate. This can be hundreds or thousands of pounds each time.
So, if you want to learn more about what car brokers do and how you can become one, browse our website or contact us. Then, if you want to start, you can buy our materials to give you a great stepping off point.
