Used car prices soar: Why Aussies are paying big bucks

Feverish demand for used cars has pushed prices of some vehicles higher than equivalent new models. Here’s why costs are soaring.

Feverish demand for used cars has pushed prices of some vehicles higher than equivalent new models.

Automotive industry insiders said the appetite for some models is “out of control” to the point where lucky motorists are making five-figure profits within days of collecting a new car.

Sought-after models with long waiting lists, such as Toyota’s LandCruiser, RAV4 Hybrid or GR Yaris are changing hands on the used market for more than their new price as impatient motorists try to jump the queue.

Pictured at Chatswood Toyota in Sydney is branch managing director Ian Mayer. Picture: Richard Dobson

Vehicle valuations website Redbook.com.au’s managing director Ross Booth said “the market is crazy”.

“Normally cars go down in price,” Mr Booth said.

“At the moment some cars are going up in price – some of them substantially. The LandCruiser is a really good example of that.”

Toyota’s LandCruiser is in run-out mode ahead of a new model expected to arrive later this year. Dealers have been inundated with requests to buy limited remaining stock, which does not match strong demand for the iconic four-wheel-drive.

Those lucky enough to get hold of one have been re-selling them for a profit.

Toyota customer Dennis Johnson bought a top-grade model for about $136,000 before he “saw an opportunity and thought I could make $30,000”.

“I listed mine for $160,000 thinking I wouldn’t get any bites,” Mr Johnson said.

“The phone went silly with inquiries … I’ve had people nearly crying on the phone with me, pleading to buy it. It’s abnormal.”

This Suzuki Jimny, which cost $32,000 new, is for sale at $47,000.

Another customer who would prefer not to be named said he bought two LandCruisers from different dealers to make sure he wouldn’t miss out, before advertising the second car for sale at a significant markup.

“I was in a panic after the first 10 dealers I rang laughed at me,” he said.

“It wasn’t my intention to make money on it.”

Toyota has not released details surrounding the next LandCruiser. It is expected to ditch V8 power from 2022, which has contributed to strong demand for the current model.

Chatswood Toyota managing director Ian Mayer said the situation was unprecedented.

“I have seen nothing like it. It’s phenomenal,” he said.

Mr Mayer said the dealership had bought back LandCruisers from customers for more than the original new-car price.

A 2016 Ford Falcon XR8 Sprint is on sale for $150,000. The car costs $59,990 new.

He put it down to the rumoured end of the V8 model and the fact that Australians were cashing in their overseas holiday refunds and buying a caravan or boat.

Toyota also has hits on its hands in the RAV4 Hybrid, which has a six month waiting list for buyers who don’t want to pay over the odds to skip the queue. Toyota’s hard-to-get GR Yaris performance car is also attracting attention from folks looking to make a quick buck by selling them for up to $20,000 more than the original price.

Other vehicles that cost more second-hand include Suzuki’s Jimny baby SUV, which is imported in relatively small numbers, and limited-edition sports cars such as Porsche’s 911 Speedster.

Owners of Australian muscle cars are also looking to cash in on a used car bubble triggered in part by coronavirus travel restrictions.

Final examples of the Ford Falcon XR8 or Holden Commodore SS cost about $150,000, roughly double their new asking price in 2016 and 2017.

Mr Booth says high values of Aussie muscle cars make more sense than brand-new models commanding a premium.

“What dictates pricing is demand and supply - with those vehicles there is zero supply, there are no new ones coming,” he said.

“But new cars tend to get better.

“We’re already seeing the used market slowing down. When does the general bubble burst?”