The used car market is once again booming with prices going up and availability going down, and this could be good news for you if you own a sought-after private registration plate. Lots of people buy private plates and cherished numbers to hide the real age of their car, and if more and more people are choosing to buy used vehicles then it stands to reason that more and more people will want to fit private plates.
Why are used car sales booming?
If market trends were easy to predict we’d all be rich, but events in the motor trade over the last decade or so have shown just how wrong even professional analysts can get it. The used vehicle market is now undergoing its second major boom in just over a year, and it’s been as unexpected and unpredictable as the one last year, and the one that happened in 2008 in the wake of the global financial crisis.
Two major factors are driving the almost unprecedented demand for new cars, one of which is starting to lose momentum a little and another that’s progressing along entirely the opposite trajectory.
The factor driving used car sales that’s starting to tail off a little is Covid-19, and the understandable desire of a lot of people to avoid public transport and also to save a little money in uncertain times.
While that factor is becoming less of an issue, it’s now being replaced by a shortage of supply of used cars in the market. The shortage of used vehicles is down to several different factors and it’s starting to look as though the situation is going to get worse before it gets better.
The pandemic factor
Last year, when the first lockdown was easing, lots of people decided to buy used cars. Some were buying them because they wanted to avoid using public transport for fear of catching the virus and it was cheaper than buying brand new. Others were now working from home rather than commuting every day to the office, so a used car for getting into the office once or twice a week was a much more cost-effective option than a weekday rail season ticket.
As we head closer and closer towards our supposed release from all restrictions on our civil liberties and some people have decided that working from home isn’t as utopian as they thought it might be, this pressure on the used car market is starting to ease. Even so, as those lockdown used cars start to age further, a personal plate is a much cheaper alternative than trying to buy a newer used car anytime soon if you don’t want everyone to know how old your car is now.
New car supply crisis
While the pressure on the used car market as a result of Covid-19 is easing, a new factor has come along in the shape of a global shortage of new cars for sale. It started with factories around the globe being closed during coronavirus lockdowns causing a shortage of supply of new vehicles for sale, but even though the factories are open again, there’s now a global shortage of semiconductors (microchips) stopping manufacturers from getting back to anything like full operating capacity.
It might be hard for some people to believe that something as small as a semiconductor could halt a car production line, but today’s new vehicles are packed with tech that relies on semiconductors. Everything in a modern vehicle now relies to some extent on computer technology, and you don’t get computers without semiconductors.
Whether it’s your engine’s ECU, your vehicle’s ABS braking system, climate control, lane-keep assist or traction control, a new vehicle simply can’t be built unless there are enough semiconductors available.
Where do used cars come from?
Used cars usually come into the market when someone replaces their current vehicle with a brand new one. The lockdowns and a lack of new vehicle stock have seriously interrupted the normal replenishment cycle of lease returns from private, fleet and rental outlets, so fewer new cars being sold means fewer used cars coming onto the market.
Also, many of those who do want a new car are shunning the idea of having to wait up to 26 weeks for delivery and they’ve been snapping up nearly new cars such as dealership demonstrators. These are exactly the sort of people who will want a private plate to hide the fact their vehicle isn’t fresh out of the showroom, and they won’t want to settle for something that isn’t personal to them in some way.
The lack of available used car stock has inevitably led to increased prices, so good luck trying to haggle over a lower price on the forecourt as the dealers know that if you don’t buy that car at the asking price, the next person to come along will do.
As the supply of used cars becoming available continues to slow, dealers are obviously going to make hay while the sun shines.
The big gamble
When the first lockdown was enforced and dealerships were forced to close completely, many thought the used car stock on their forecourts would depreciate horrendously month after month. In fact, the complete opposite happened and dealers are not going to let the current boom end without making the most they can of it.
The problem dealers have is just like the prices you have to pay on the forecourt for a used car increase through high demand and short supply, the same thing goes for the prices they have to pay for the stock in the first place. It’s all well and good paying whatever it costs to get your hands on stock to sell. But if a dealer gets caught out with a forecourt full of used cars they’ve paid over the odds for when the demand slows and prices start to fall again, they could lose much or all of the profit they’ve made during the boom time.
Owning a tasty, desirable private number plate is much less of a risk as you’re unlikely to lose anything at all if you hang on to it and there’s every chance it will appreciate in value over time. And while used cars are in such demand you could even make a killing at the moment if you find the right buyer.