Used car prices through the roof

Australians are paying nearly 50 per cent more for used cars than before the pandemic, as a shortage of new vehicles and cashed-up Australians planning road trips push prices to record highs.

Used Toyota Hiluxes were selling for almost as much as a new version as demand for second-hand vehicles sent prices to record highs.

Australians are paying nearly 50 per cent more for used cars than before the pandemic, as a shortage of new vehicles and cashed-up Australians planning road trips have combined to push prices to record highs.

Used car prices dipped 10 per cent during the early stages of the Covid-19 crisis, but are now 60 per cent above the April 2020 low, Moody’s Analytics’ used car price index shows.

The extraordinary recent gains break a trend of more gradually lifting prices: the index shows prices gained only 10 per cent over the two years to December 2019. In contrast, prices were up 10 per cent in the first half of this year alone.

Surging used car values are ­another surprising side-effect of the Covid-19 crisis, which has created pockets of pressure throughout the economy as restrictions here and abroad have strangled supply for some goods even as ­demand has surged.

Resale values for utes in particular are through the roof, ­according to Moody’s senior economist Michael Brisson, as the government’s instant asset write-off scheme – part of the suite of Covid-19 fiscal support measures – turbocharged demand for commercial vehicles from tradies who were also enjoying a boom in construction activity.

For example, a one-year-old Toyota HiLux with 30,000km on the odometer was going for nearly 90 per cent of the price of a new HiLux, Mr Brisson said.

There are also anecdotes of owners of used LandCruiser four-wheel drives being able to sell for more than they paid two or three years earlier as closed internat­ional borders drove a spike in domestic travel.

Mr Brisson said used car prices had been through two “distinct phases” since the pandemic low in April of last year.

Values jumped by more than 5 per cent on average in the initial six months as Australians shunned public transport for fear of catching Covid-19 and chose to drive themselves. Then prices found another leg higher towards the end of 2020 as short­ages of new vehicles began to bite – a worldwide phenomenon as semiconductor manufacturers closed their factory doors.

Modern cars contain hundreds of semiconductors, and an electric vehicle thousands, and surging demand for electronic devices through the pandemic led to stiffer competition for the essential components.

As Australian dealers have struggled to get their hands on new stock, sales have rocketed.

There were a record 100,809 new vehicles sold in May, putting the industry on track to surpass one million sales this year, according to the Federal Chamber of ­Automotive Industries.

FCAI director Peter Griffin said the sales figures would have been even higher were it not for significant delays in the delivery of some new cars, with buyers in some instances being forced to wait until 2022 for delivery.