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German used-car prices hit record highs on tight supply chains

02 May 2022 - 16:09 By William Wilkes
Prices of used cars in Germany – Europe’s largest auto market – jumped 27% from a year ago in April, according to data from online car market mobile.de.
Prices of used cars in Germany – Europe’s largest auto market – jumped 27% from a year ago in April, according to data from online car market mobile.de.
Image: ricul /123rf

A shortage of chips and other components have forced the likes of Mercedes-Benz AG and Volkswagen AG to rein in production, and the lack of new cars is trickling down market, adding more pressure on consumers grappling with surging inflation.

Prices of used cars in Germany — Europe’s largest auto market — jumped 27% from a year ago in April, according to data from online car market mobile.de. The average of €31,801 (roughly R535,081) is the highest on record.

Supply-chain issues have upended decades of automotive economics, with manufacturers generating sizeable profits despite production snarls. Mercedes last week said revenues in the first quarter climbed 8% even as it shipped fewer cars. The secret is in rising prices. The surge in used vehicles helps too by increasing the value of the cars leased to customers.

A shortage of chips and other components have forced the likes of Mercedes-Benz AG and Volkswagen AG to rein in production, and the lack of new cars is trickling down market, adding more pressure on consumers grappling with surging inflation.
A shortage of chips and other components have forced the likes of Mercedes-Benz AG and Volkswagen AG to rein in production, and the lack of new cars is trickling down market, adding more pressure on consumers grappling with surging inflation.
Image: Bloomberg

The market remains tight, with the number of autos listed falling by nearly a fifth to 561,806, according to the mobile.de data. The number of days cars spent online before being sold fell to 73 days from 103 days a year ago. 

The war in Ukraine is adding another burden on supply chains, and disruption is expected to keep car production below pre-pandemic levels this year. That suggests prices will stay elevated if demand remains firm. Market researcher LMC Automotive expects deliveries of around 10.6-million cars in Europe this year, well below the pre-pandemic mark of 14-million.

German inflation unexpectedly accelerated in April to the highest since post-reunification records began in the early 1990s. Used cars form part of the basket of goods used to calculate Germany’s inflation rate. 

More stories like this are available on bloomberg.com


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