Used car price surge to last two more years as popular Landcruiser cost spikes 50 per cent

For the past 12 months, used car prices have been surging and now there’s a warning about when people should think about buying.

Darren Cartwright

@dceeaap

3 min read

April 10, 2021 - 6:52AM

NCA NewsWire

It could be two years before the absurd prices being paid for used cars ease, experts fear.

The warning comes as second-hand dealers struggle to re-stock and trouble plagues the importation of new cars and parts during the coronavirus pandemic.

Exclusive Carsales.com.au data, obtained by NCA NewsWire, shows the median price for a Toyota Landcruiser has risen 50.7 per cent while the ultimate run-around-town vehicle Toyota Corolla has risen 30.5 per cent.

The Toyota LandCruiser 200 Series has had a 50 per cent rise in its second-hand price, says carsales.com.au editor-in-chief Mike Sinclair

The Carsales.com.au statistics compared March 2020, when coronavirus cases began to sweep the nation, with March 2021.

“Our research throughout the COVID period showed there are a significant number of people adding a car to their family, or buying a new car and not trading in their old one,” said Carsales’ editor-in-chief Mike Sinclair.

The retention of vehicles is one reason second-hand cars were in short supply and it is just one issue confronting dealerships, said Motor Trader’s Associations of Queensland (MTAQ) remarketing division chairman Peter Dever.

Coronavirus-related factory closures in car-manufacturing countries have “choked new car supply lines and in turn reduced the number of vehicles being traded in,” Mr Dever said.

“The knock-on effect is that usually for every new car sold, one is traded-in but they’re not, and so we have a shortage.”

MTAQ remarketing chairman Peter Dever said it could be two years before used car prices ease. Picture: Supplied

On that basis, Mr Dever said he could not see a way out of the supply-demand rut for up to two years and that’s providing car manufacturing countries ramp-up their production.

“It’s just ridiculous the prices dealers are being asked to pay at a wholesale level and that is being passed on at a resale level,” Mr Dever said.

“Cars that we should be paying $5000 for, we are paying $7,500 or more.

“We’ve never seen it like this and I can’t see it tailing off inside 12 to 24 months.”

Returning expats are also to blame for the high demand in second hand vehicles, as are holidaymakers looking for a vehicle to sustain them in an outback adventure, where they may normally have travelled overseas instead.

The urge to head inland has primarily driven-up the price of second-hand off-road vehicles, Mr Sinclair said.

“People are buying bigger caravans and bigger boats because people want a vehicle they can go bush in to complete that mythical outback road trip,” Mr Sinclair said.

ABS data showed about 90,000 long-term residents, who are deemed to have been abroad for at least 12 months, returned in the 12 months to September 2020 and 35,490 returned between April 2020 and Jan 2021.

An ABS representative said demand for off-road vehicles had most likely increased because of the international travel ban.

“Part of the additional demand in vehicles could also be that Australian residents are not going overseas on holidays and spending their money overseas,” they said.

The need for SUV’s to head to the outback or inland, like Birdsville, to holiday while international borders are closed are helping push up the price of popular 4WDs. Picture: Instagram

Mr Dever said lockdowns and business closures had forced people to think outside the square for employment and that led to a dearth of utes and vans on the second-hand market.

“Any vehicle that could ‘buy you a job’ has been moving at a rapid rate,” Mr Dever said.

The sudden price surge has been noted by insurance companies.

An AAMI spokeswoman said they monitor market value prices if used vehicles on a monthly basis and, along with an extensive list of other factors, determine the best price for their customers.

“Over the past few months we’ve seen an increase in the value of used cars, mainly caused by interruptions to the supply of new cars due to COVID-19,” the spokeswoman said.

“AAMI car insurance policies are based on an agreed value which is locked in for the full policy term.”