Will Car Prices Drop in 2023 – What You Need to Know 

In this article..

Why is the cost of used cars so high?

Will prices drop?

When will used car prices drop? 

How to make sure you’re getting a good deal on your used car.

Are you ready to hit the road in your dream car?  

With most people struggling with the cost-of-living crisis, the rising cost of second-hand cars is making it increasingly difficult for drivers to stay on the road. 

With new car prices continuing to climb, many people are turning to the second-hand market in search of more affordable options. However, the demand for used cars has skyrocketed in recent years, driving up prices and making it increasingly difficult for people to find good deals. This means that many drivers are being forced to pay more than they can afford for a reliable vehicle. Otherwise, they must make do with an older or less reliable car that may require more frequent and costly repairs.  

According to Auto-Trader, the average cost of a used car has increased by over £4,000 in the year since the pandemic. This has made it harder than ever to secure an affordable vehicle.  

Why is the cost of used cars so high? 

There is a current supply-chain shortage of semiconductors that are needed by car manufacturers across the globe – so the production of new vehicles was hit badly. This, tied in with the easing of Covid-related restrictions, has led to a surge in consumer demand for cars. 

As a result, prices for used cars remain high, creating challenges for those seeking affordable options in the market. While the end of Covid restrictions has opened up retail opportunities, the ongoing supply chain disruptions and high demand continue to drive up costs for drivers in the UK. 

This has caused some customers who would normally purchase a new car to instead turn to the used car market, where they can find more affordable options. However, as demand for used cars has surged, so have prices. 

Will prices drop?  

New car production is beginning to recover, which is expected to ease demand in the used car market over time. According to the latest report from the Society of Motor Manufacturers and Traders (SMMT), new car registrations saw a 26% surge in February, marking the seventh consecutive month of growth in new car sales. This suggests that more customers are finally turning to new cars, potentially reducing the pressure on the used car market. As the production and supply of new cars improve, it is anticipated that the demand for used cars will decrease. This will ultimately cause prices to stabilise. More recently, a study found that 32% of used car dealers feel that used car value and prices will fall by more than 10% during 2023, as a direct result of the financial crisis we all face (AutoTrader, 2023).

When will used car prices drop? 

Since January, the availability of semiconductors has increased significantly, enabling car manufacturers to increase the supply of new vehicles.  

New cars are becoming more affordable and accessible. Customers who opted for a used car may now look for a new one due to reduced prices and increased accessibility. Customers switching back to the new car market will reduce demand in the used market and, with that, reduce prices. JPMorgan has stated that used car prices could fall by as much as 20% in 2023, and new car prices could drop by 5%. 

We anticipate that used car prices will stabilise and eventually decrease within the next six months. This is expected to bring relief to drivers who have been struggling with high used car prices over the past year. As new car supply improves, we expect a healthier market balance, providing more options and affordability for customers seeking a new car. 

How to make sure you’re getting a good deal on your used car 

1. Before purchasing a new vehicle, it’s a good idea to find out how long it’s been on the market. The secret to car buying is just like buying a new home, negotiating will get you the best price! Car dealerships are more likely to reduce the cost of a car if it has been sitting in their forecourt for a while.
2. Choose a reliable car dealership – this will prevent you experiencing any unexpected costs post-sale. “Cheap” used cars are very often cheap for a reason – they cost a massive amount to keep up and running. The best way to protect yourself is to only purchase a car through a reputable dealer.
3. Check out a cars MOT and service history before you buy! By taking advantage of the ability to search a vehicle’s MOT history online, you can save yourself a lot of trouble. This simple step can help you spot any underlying problems or defects that could impact the car’s reliability. With this, you can make an informed decision about whether it’s worth buying. 
4. Check out the car value online before committing to a purchase. It’s not uncommon to feel overwhelmed when trying to determine the value of a used car, especially with so many makes and models to choose from. Before making any offers on a used car, it’s important to check its value to ensure you’re not overpaying. Fortunately, there are several online resources like Parkers and WhatCar? that offer valuation information for a wide range of used cars, including popular models and niche sports cars. By knowing the true value of a car, you can approach the negotiation process with greater confidence and potentially save money. 
5. Find out what you can borrow before finding your car – it’s a good idea to find out how much car finance you can afford before finding a vehicle. This way, you have an idea of your budget and can finetune your search to match.  

If you’re in the market for a used car, don’t let financing hold you back. Apply for car finance with Marsh Finance today and get pre-approved in just 30 seconds. 

Our quick and easy application process won’t impact your credit score, and you’ll find out if you’re pre-approved the same day. With flexible financing options and competitive rates, we’ll work with you to find a payment plan that fits your budget and gets you behind the wheel of your perfect car. 

Don’t wait – apply for car finance with Marsh Finance now and take the first step towards owning the car of your dreams.