Back to the hatch! Cost crisis is heralding a return to cheaper cars

The cost-of-living crisis and rising fuel prices are driving cash-strapped motorists towards smaller secondhand superminis as they overtake larger family SUVs in used car sales.

Handy hatchbacks and perky city cars were the fastest selling used cars of 2022, according to AA Cars’ ranking of vehicles sold on its website.

And the classic but soon to be discontinued Ford Fiesta retained its title of best-selling car overall for the eighth year in a row.

It was followed by the Ford Focus; Volkswagen Polo; Volkswagen Golf; Nissan Qashqai; Vauxhall Corsa; Fiat 500; Mercedes C class; Ford Kuga and Toyota Yaris. The Nissan Qashqai and Ford Kuga are the only compact SUVs in that list.

Small but powerful

AA Cars said the trend for smaller vehicles will reverse the picture in 2021, when eight of the top ten models were SUVs.

It believes the rising popularity of smaller, lighter, more fuel-efficient cars is due to rising fuel prices, which, according to official statistics, rose by 17.2 percent in the 12 months to the end of November and peaked in July at a record 191p. per liter for unleaded and 199p for diesel.

AA director Mark Oakley said: “This year’s ranking of the fastest selling used cars is almost entirely dominated by smaller models, in stark contrast to 2021’s SUV-heavy list.

“The soaring costs of living and fuel inevitably influence people’s purchasing decisions.

“Hatchbacks and city cars are generally cheaper to buy than SUVs, while their smaller size and lower weight also allow them to offer better fuel economy – making them particularly attractive in today’s market.”

Mr Oakley added: ‘Throughout the year we have seen a steady stream of cost-conscious buyers attracted to the greater choice – and reduced risk of depreciation – that used cars offer compared to brand new models.’

But he believed 2022 could be “the pinnacle” for the all-conquering Fiesta, which has been the most popular used car of them all for years: “Ford has confirmed that production of the Fiesta will end next year, without saying what will replace it.’

Returning child

However, there is still plenty of life in the SUV market as we accelerate into 2023. Motoring website AutoTrader notes: “SUVs still dominate the new cars coming in 2023, although there is hope that station wagons, hatchbacks and sedans will see a reinvention and sort of comeback.’

New SUVs arriving this year include the all-electric Jeep Avenger, Volvo EX90, Polestar 3 and Kia EV9; the BMW XM and – a first – the £300,000 Ferrari Purosangue.

Analysis by AutoTrader also found that average used car prices in Britain are more than £4,000 higher than before the pandemic, with some second-hand cars rising in value.

It said the average price of a used car was at an all-time high in 2022 – £17,548 compared to £15,204 in 2021, £13,538 in 2020 and £12,999 in 2019.

However, there are signs of a turn for the worse as the UK and international economies become more fragile, which could mean bargains for savvy buyers willing to negotiate price.

The respected Car Dealer magazine (car dealermagazine.co.uk) recently noted: ‘Market used car prices fell 1.5 per cent in December – and the value of used electric cars continued to fall.’

Citing data shown to the car dealership by trade valuation experts Cap HPI, it reported: ‘December was the third largest price decline in 2022 after March and April, both of which fell 2.1 percent.

“It means the average three-year-old used car with 60,000 miles on it has lost about £300 in value.”

Price movements from December to January were “in line” with the five-year average, demonstrating “the overall strength of the market despite the economic turmoil the country has faced this year,” the experts said.

However, the average price of one-year-old cars fell by 1.7 per cent, or about £590 – the biggest drop all year for this sector.

Prices for five-year-old and ten-year-old cars fell the least: by 1.4 percent and 0.8 percent respectively.

It fails to spark

Against a background of anger over the insufficient number of public charging points for electric cars, second-hand EV prices have fallen the fastest – which is good news for buyers, of course, but a major concern for those selling.

Among the fastest fallers were second-hand prices for Tesla’s Model 3, which fell 9.6 percent, or about £3,000, while the Model Y fell nearly 6 percent.

Cap HPI said battery electric vehicles were “the most challenging area of ​​the used car market” in December as EV values ​​fell for the fourth month in a row.

The price for three-year-old electric cars has fallen by a record 5.2 per cent, or about £1,625.

Car Dealer magazine commented: ‘When the last four months are added together, values ​​are down 10.4 per cent, or about £3,500.’

So if you’re looking for an EV bargain, now’s the time to shop around.