Used cars selling for thousands more than they cost new

New stock shortages, floods and Covid have played havoc with car prices in Australia and some five-year-old models are giving their owners thousands in profit. See the list.

Five-year-old cars are selling for thousands of dollars more than they cost new, as used car prices continue to soar.

A search of online classifieds sites shows that 2017 versions of the popular Toyota HiLux SR5 – which sold for $56,440 new – are being advertised for as much as $62,000. A 2019 version with 20,000km on the clock is being advertised for as much as $73,000.

A 2017 Toyota Corolla, which cost $23,490 new, is being advertised for $27,590 with 26,000km on the clock.

Toyota’s RAV4 Hybrid is also fetching eye-watering prices. When the latest model launched in 2019, an all-wheel-drive GXL auto cost $38,490 but Carsales has one with 24,000km on the clock for $56,960.

The 2017 Toyota Corolla Ascent.

Market norms have been tipped on their head in the past two years as stock shortages, floods and Covid have played havoc with car prices.

Traditionally, a new car would lose up to 25 per cent of its value in the first year of ownership and 40 per cent over the first three years.

But Ross Booth, head of car valuation bible Redbook, said used car prices had spiked by more than 40 per cent in the past two years, while new-car prices were up by about 12 per cent.

He said “once in a generation” market conditions meant buyers looking at buying a late-model used car should stretch to a new car if they could.

“Our advice for some time has been if you can get a new car, buy a new car,” he said.

New cars had a number of advantages over second-hand ones, including warranty coverage, fixed servicing prices and lower fuel consumption, which had become more relevant as petrol prices soared past $2 a litre.

Booth said buyers should also stay patient and wait six months to purchase if they could.

“This obsession with having to have a car straight away is crazy,” he said.

He warned that the market would eventually correct itself, leaving impatient buyers saddled with cars that depreciate rapidly.

“Eventually the market will normalise.

“We are headed towards a global recession and there have been some demand decreases in the UK and the US in the automotive space. We haven’t quite seen that yet but who knows what’s going to happen with the Australian economy,” he said.

The 2019 Toyota HiLux SR5.

There are signs the supply of used cars is increasing as well. Leading car classified site Carsales has 10,000 more vehicles for sale than it did it in March.

Despite that sellers are still seeking top dollar.

“People are certainly trying it on,” Booth said.

He recommended buyers still try to negotiate and said they could save money by looking at less popular brands.

“Why would you buy a used Toyota? Just buy a new Renault,” he said.

There are signs that customers are doing just that. French brand Renault and Chinese newcomer MG have recorded big increases in sales in the first six months of this year, while popular brands such as Mazda and Nissan have recorded drops.

The same theory applied to different types of vehicles.

“SUVs are still really, really hot, so buy a new sedan or a new hatchback. Buy a segment that’s not as hot, because you’re going to get better value.

Now more than ever, he said, it “pays to shop around”.

Originally published as Used cars selling for thousands more than they cost new