A shortage of used cars will keep values at a higher level for the next two to three years, according to auction firm SVA.

The increased cost of living and rising inflation have both impacted retail used car demand during 2022 affecting the wholesale market with falling prices and reduced sales.

Used car prices peaked in September and have been in decline since January.

With 1.72m fewer new cars being sold between January 2020 and May 2022, SVA points out that the market is short of 1.72m used cars, while dealers are also retaining a greater percentage of their part exchanges against their new car sales.

Combined, these trends have created a wholesale used car shortage of more than 2m since Q1 2020, which SV says puts into perspective how the sector has been badly affected by new car shortages created by the global semiconductor crisis.

Alex Wright, managing director of SVA, said: “The market is so short of stock that even if demand remains depressed for a prolonged period prices will remain strong. We do not predict a price crash like we’ve seen in previous years as each month the supply shortage is getting worse.

“We believe prices will stay at their new normal for another two to three years while the hole in the used car supply is slowly filled.”

The Vehicle Remarketing Association (VRA) has warned that a shortage of stock in the used car market is likely to worsen with manufacturers diverting the supply of new cars away from fleet towards more profitable private sales.