‘Fallen off a cliff’: Aussie used cars have dropped in price
A gradual return to normality is putting pressure on used car prices, and making it easier to get hold of a new set of wheels. See where costs have changed.
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USED car prices are falling as cost of living pressures force families to reconsider their transport needs and the automotive industry recovers from the coronavirus pandemic.
Experts say used car prices are returning to realistic levels, helped by improved supply and softening demand for new vehicles.
New cars are becoming easier to get hold of as the industry recovers from component shortages, pandemic lockdowns and customs delays that pushed waiting times for many new vehicles beyond 12 months.
Mark Harland, chief operating officer at EV Direct, the Australian distributor of BYD electric cars, said the brand has thousands of cars on their way Down Under, thanks to “a supply chain that’s able to flex”.
BYD is using shipping containers to streamline biosecurity requirements that have put the brakes on rival brands.
Improved availability of new vehicles has also helped push down prices for used cars.
Carsales has reported a 3.4 per cent drop in prices for used cars listed by dealers this year. That equates to a fall of less than $1500 for a $40,000 car.
But research by Moody’s Analytics suggests year-on-year price reductions were closer to 10 per cent on average.
Its used vehicle price index suggests the cost of fashionable utes and SUVs have fallen by about 5 per cent, while less trendy sedans and hatchbacks have dropped by 18.6 per cent.
That’s a drop of almost $7500 for a $40,000 car.
Victorian motorist Graham Waldron said his local Honda dealership agreed on a generous trade-in price for his second-hand Mercedes before renegotiating and stripping $7000 from its value.
Kaine Ransom, director of Automotive Vehicle Brokers Australia, said that was not an unusual story.
“The used car market has definitely fallen off a cliff – trade-in values, used car values have absolutely plummeted,” Mr Ransom said.
“There was a lot of heat about used cars a year ago, they were overpriced [but] today the market has definitely come off. It’s very quiet.”
Car companies such as Toyota have reported a drop in inquiries for new cars.
One dealer source said dozens of customers were cancelling orders each week.
Another executive said used car showrooms were worried they have overpaid for stock that is becoming difficult to sell at a profit.
Peter Willis, director of buying for online dealership Carma said “there has been a return to a normal market” following pandemic-induced price increases.
“There has been more of a return to the normal depreciation of vehicles to where they should be.
“Used cars will start to look like good value again.”
Ross Booth, managing director of the Redbook vehicle valuation service, said the used market “has started to depreciate”.
But Mr Booth said motorists should not expect prices to drop by thousands of dollars in the near future.
“Used cars haven’t decreased back to pre-Covid levels and we don’t see that happening for the foreseeable future,” he said.
Graham Cooke, head of consumer research at Finder, said “the bubble is bursting”.
“Used cars don’t tend to go up in value normally. Something has to push them up.
“When is the market going to get back to normal? When you can get a car in two to three months.
“It’s all out of whack at the moment.”
Originally published as ‘Fallen off a cliff’: Aussie used cars have dropped in price
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