Why are used cars so expensive today? We ask an expert

Cars are supposed to lose value as soon as you take them off the forecourt. Yet potential used car customers may have noticed something odd: prices are rising. I asked David Bailey, a professor of business economics specializing in the automotive sector, why.

I bought my car for £1,850 in 2017. It is currently on sale for £2,400. Has something like this ever happened? No, it's unprecedented. In some models, the used car may be more expensive than its brand new equivalent.

How? Due to the current shortage of microchips, cars are not being built. So if you have a nearly new car, in some cases it's worth more than being on the waiting list for six months to get it brand new.

Used car prices have been going up for quite some time, right? Yes. When Covid hit in 2020, automakers closed but demand was high, especially since people didn't want to use public transport. This drove up used car prices.

As the proud owner of a no-frills car, do we really need microchips - who needs bells and whistles? whistles when you can work your biceps on a roll-up window? Modern cars contain hundreds of chips, for everything from adjusting your seat to air conditioning. Now automakers are trying to pull the chips out because of the shortage, but it will take time. In some cases they even revert to an analog dashboard.

That's what I got! Wow, I can't believe my little pootler is about to go top of the line. A whole half-turn. But won't microchips be back to normal soon, now that Covid shutdowns are in the rearview mirror (sorry)? Well, that was just the initial effect. What automakers have now is long overdue Covid. So when the auto industry canceled its chip orders because it had shut down, the chipmakers refocused to do other things: video games, televisions, electronics. When the auto industry restarted production, it was at the back of the pack. And things were turned upside down again by the war in Ukraine, where 50% of the high-grade neon used to make chips comes from.

How will this affect our change of car society? Right now we have high gas prices, expensive cars and expensive insurance for young people. So there is a question mark over whether they want a car when they can just hop in an Uber or on an electric scooter. We are seeing the first signs of a drop in car ownership among young people, especially in the United States.

Good for the planet, even if it's a little pity for the young people of tomorrow won't experience the cheap thrill of making a donut in an empty supermarket parking lot. What about electric cars? One in six cars registered at the start of this year were plug-ins. So we are already witnessing a big change. We're hoping the price of electric cars will come down as batteries get cheaper thanks to companies making more of them, in which case we'll see electric cars take off in the middle of this decade. I think after about 2025 there won't be much reason to buy an internal combustion engine car if you're buying new. And in the long term, say the late 2030s, we could be looking at self-driving cars. Why own a car if you can hire a self-driving taxi?