How long can the used car market stay so hot?
Motorway, the online used car dealer, has become a ‘unicorn’ today as rival Cinch owners vie for acquisitions for Marshall Motors. Recent accounts by Kazoo, a leader in the online car buying boom, show sales increased from £1.2 million in 2019 to £162 million last year. If cars are caught speeding like these companies, they will be given tickets for speeding.
Used cars used to patronize back page listings and car park bargains, but a new breed of companies have professionalized and modernized the process. All of this venture capital has been funded by a wedge of cash.
Why are investors getting excited about used cars? Covid has made it one of the hottest markets in the world. A pandemic-induced fear of public transport has driven up demand for cars. Meanwhile, the Covid disruption has hit the supply of microchips that are needed to build modern cars.
Result? For about 1 in 5 models, a used car now costs more than a new one as people struggle to get a factory new set of wheels.
It can’t last. As the supply chain pressure eases, the supply of new cars will return. And the shift to net zero means older petrol, diesel and even hybrid vehicles will rapidly lose their appeal.
All this means that the red hot resale market can be as hot as the old banger clapping on the side of the road.