Prices of second-hand cars have risen about 30% due to the global shortage of micro-chips, which has caused delays in new vehicle production and driven people to the used market, according to a member of an importers’ association.
With fewer new cars being produced, buyers are having to wait to make their purchase.
Instead, many are either buying second-hand or holding on to their own vehicle, causing demand to rise and supply to fall, said used-car importer Shawn Abela.
“People ordering new cars now are being told to wait until next year for delivery, which means they are holding on to their own vehicles and not putting them on the market, leading to a shortage,” Abela explained.
Some clients, told to wait “10 to 12 months” for their chosen new vehicle to be delivered, simply cannot wait and go for second-hand.
“The result is that quality second-hand cars are few and far between and prices are really high,” Abela, who sits on the board of the recently set-up Malta Car Importers Association (MCIA), said.
Still, “good-quality used cars have never been so appealing to clients, given the slow production and delivery of their new counterparts”.
Car manufacturing relies on computer chips to control everything from windows to navigation systems. The industry has been impacted worldwide, with supplies of semiconductors failing to meet demand due mainly to the pandemic.
Abela said car values globally were not depreciating, with certain brands in the UK, particularly premium models, selling for the same amount as the new version.
The used car market in Malta had already been hit by Brexit but the situation has been compounded by the chip issue, pushing prices even higher, Abela said.
The thinking is that new car production levels will not return to normality until 2023, and when they do, demand for used cars will continue to exceed supply and prices remain high. Car production had gone down by 40 per cent, Abela said, so “it stands to reason that people are trading in 40 per cent fewer cars”.
The Association of Car Importers (ACIM) has told Times of Malta it expects production delays due to microchip shortages to last until the second quarter of next year.
It advised buyers not to panic and wait “a few extra months” for their long-term purchase.
In a later statement, ACIM General Secretary Deborah Schembri clarified that the association suggested “customers do not delay purchasing their new car and book their vehicles to take advantage of the generous government grant and avoid disappointment”.
Many new car importers have stocks of such new cars, she said, and manufacturers are racing to improve the supply chain to meet the increased demand.