Used car prices to drop further in 2024

Finally some good news for Australians struggling with cost of living pressures as the average price of a second hand car has dropped significantly. See how far prices have fallen.

Australians on the hunt for an affordable car are in luck.

A new report from the Australian Automotive Dealer Association (AADA) and AutoGrab shows the price of used cars is dropping.

Autograb chief commercial officer Saxon Odgers said this is a win for buyers looking to purchase a new ride in 2024 as it will make a used car more accessible.

“The demand for used cars remained robust in 2023, attributed to our growing population and cost of living pressures reducing buying power,” said Odgers.

“The good news for those looking to purchase a used car is that we’ve seen a clear downward price trajectory since March 2023 following a surge of new vehicle supply, with this pattern anticipated to persist through the first half of 2024.”

Used car prices have fallen steadily over the past nine months with the trend to continue in 2024.

Residual value of used cars fell from a high of more than 75 per cent of original purchase price in February 2023 to 67 per cent in December.

Used vehicles are taking longer to sell too with the average used car taking more than 50 days to sell in December compared to about 40 days in March.

This trend shows demand is slowing which will put further downward pressure on used car sales prices.

The report expects this pattern to persist through the first half of 2024 as car makers continue to fill a backlog of new car orders and fleets replace their ageing inventory.

The ACT and NSW had the biggest price drop for five to seven year old vehicles, dropping by 15 and 14.4 per cent respectively.

Western Australian used cars experienced the smallest drop, decreasing in price on average by 11.2 per cent.

In Victoria prices have dropped by 13.3 per cent, in Queensland they’ve fallen 12.9 per cent, South Australian used cars have dropped by 13.7 per cent while Tasmanian and Northern Territory experienced a drop of 12.3 and 13.1 per cent repectively.

The Ford ranger was the most popular used car.

More than 65 per cent of used cars sold are petrol powered and more than 30 per cent are powered by diesel.

Electric cars account for just 0.6 per cent of sales or about 12,500 vehicles.

The report states the used car market for electric cars is still young and volatile and prices are dropping at a higher rate than conventional powered vehicles.

Prices for electric cars under two years old have declined by more than 15 per cent and EVs between two and four years old have fallen by more than 23 per cent.

EVs are also taking longer to sell, with a two to four year old vehicle taking more than 75 days to find a new home.

Utes such as the Toyota HiLux experienced the smallest drop. Picture: Supplied.

The report revealed Australians bought more than 2 million used cars in 2023, nearly double the 1.2m new cars sold in the same period.

Toyota was the most popular brand of used car bought in 2023 accounting for more than 16 per cent of the market. This matches the Japanese giant’s dominance in the new car segment where it sells close to one in five new cars.

Mazda was second followed by Ford, Hyundai and Holden.

The most popular models were the Ford Ranger with more than 65,000 used car sales followed by the Toyota HiLux with more than 62,000.

This followed the new car market where the Ranger and HiLux were the two top selling models in 2023.

Second hand electric cars fared the worst in 2023. Picture: Thomas Wielecki

The next most popular models were the Toyota Corolla, Mazda3 and Hyundai i30 small cars.

Small hatchbacks have fallen out of favour with new car buyers who are choosing high-riding SUVs instead. Those three models were mainstays in the top 10 sellers list for new cars over the past decade and supply of those models is strong on the used market.

Head of the AADA James Voortman said retained value was key for used car buyers and dealers.

Small cars are still a popular choice for second hand car buyers.

“When diving into retained values of vehicles, a topic that interests many consumers and Dealers, we can see that across all age groups, utes and light commercial vehicles held their values above the average,” he said.

“Passenger vehicles across all age groups tracked close to the average, while SUVs were

the worst performing vehicle segments in terms of retained value, sitting well below average for all age groups,” he said.

Retained value is key to Toyota’s dominance with the Japanese maker known for its reliability, strong resale and low ownership costs.

Originally published as Used car prices to drop further in 2024