19 July 2021

Robert Forrester bought a Ford Fiesta for his daughter a year ago. In the past seven weeks, its value has jumped £1,200. “It’s quite staggering, isn’t it,” said the Vertu CEO. He calls the rise in values something “I’ve not seen before in 20 years”.

Official data from the ONS last week showed that secondhand car prices rise 5.6% in June. They were cited as one of the reasons annual inflation has risen to 2.5%, the highest level in nearly three years. It is above the 2.2% expected by analysists and the Bank of England target of 2%. This is now stoking a debate about whether Britain faces an inflationary spiral.

Auto Trader data backs this up. Average used car prices rise a record 9.7% in the second week of June compared to a year ago – the 57^th successive week of price rises. The online marketplace says used cars are also selling faster.

BBC economics editor Faisal Islam visited Nuneaton Cars. He was told buyers were attempting to gazump each other by offering higher prices for cars already marked as sold. The company also invested to facilitate nationwide delivery during the pandemic, further broadening its reach (and potential for gazumping).

The phenomenon is the same in the US: used car prices grew a record 10.5% in June, with year-on-year inflation hitting 45%.

Used cars are now said to be providing an excellent case study in why, “when demand rebounds quickly and supply suffers bottlenecks, it leads to inflation”.

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Tags: Auto Trader, Nuneaton Cars, ONS, Robert Forrester, used cars, Vertu