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Have retail used car prices reached a ceiling? The price gap between newer cars and older ones is narrowing, says buyacar

Have retail used car prices reached a ceiling? The price gap between newer cars and older ones is narrowing, says buyacar

Soaring used car prices may have reached a ceiling, signalled by a shrinking cost gap between newer and older cars.

According to the online car supermarket, the average price paid for a 2021-registered car is just 4.6% higher than for cars registered in 2020.

Buyacar research shows that the gap was 24.1% in 2019, before the coronavirus pandemic and the global electronic chip shortage disrupted the market.

Rising used car trade values have been making headlines all year, with growing concerns in the industry that retail prices cannot keep pace indefinitely.

Now buyacar analysts believe that a growing consumer appetite for older, more desirable cars has pushed prices so close to an affordability ceiling that there is little room left for the usual premiums commanded by the latest plate.

Because the market was disrupted so severely amid the pandemic crisis in 2020 they argue that a more realistic comparison of this year's price performance is made by contrasting today's market with that of 2019.

In 2019 customers of were paying an average of £20,595 for a car registered in the same year. So far in 2021 that figure has risen by 8.2% to £22,290.

But for older cars the price rise is significantly higher.

For example, cars registered last year are selling for £21,303 on average in 2021. But in 2019 prices paid for 2018 models were £16,585 on average.

This means that prices paid for cars around one-year-old have shot up by 28.4% in comparison with 2019 .

It's a similar story for older cars, with prices paid this year for those between two and three years old 18.4% higher than for a similar age vehicle in 2019.

Buyacar began reporting on a growing customer tendency to target older cars from stronger image brands, with higher levels of equipment and trim, around a year ago. Now the latest analysis suggests that this approach has pushed prices paid to a level so close to traditional 'nearly new' values that a ceiling may have been reached for newer cars.

"We cannot know for certain whether there is room in the market for prices to continue rising but there are certainly signs that the upward trajectory is slowing," said Christofer Lloyd, Editor of

"We can say with certainty that the gap is narrowing dramatically in today's market values between a car registered this year and one that first appeared on the road in 2020.

"This is especially apparent when we compare the substantial price gap that existed between nearly new and older cars in 2019 with that of the current market.

"Our customers have been effectively upgrading their car choices by spending more on older and often premium brand cars, with higher mileages, and we might be seeing an unexpected side effect of that trend.

"The good news for customers who prefer a car sporting the current year's plate is that they no longer have to pay such a large premium for it, in comparison with an older vehicle."

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