Used car sales surge amid cost of living crunch

Budget-conscious motorists are fuelling a surge in used car sales, with dual cab utes topping the pops. See the most popular used vehicles sold in 2023.

The 2023 model of the Ford Ranger, which is the most popular used car sold in Australia.

Used car sales surged over the course of 2023, and demand is expected to motor ahead as budget-conscious households look to cut spending on luxury items amid the cost of living crunch.

New figures from the Australian Automotive Dealer Association (AADA) and data analytics firm AutoGrab reveal 2.1 million used cars were sold in Australia last year, with monthly sales peaking at more than 200,000 in November - 34 per cent higher than the start of the year in January.

Buyers have been cashing in on falling used car prices, which have been on a downward trend since March as the supply of new cars eases previous shortages that resulted in a boom in used car prices in the wake of the pandemic.

According to the inaugural Automotive Insights Report, used car prices have been falling by up to 1.5 per cent a month since an influx of new cars began entering the Australian market in March.

AutoGrab chief commercial officer Saxon Odgers said rising interest rates and cost of living pressures were causing many motorists to opt for used rather than new cars, while increasing levels of migration into Australia were also playing a part in higher used sales volumes.

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

“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. 

“This represents a win for consumers who now have a choice when looking to buy their next car as new cars are available for delivery and used cars are more accessible.”

New car sales reached a record 1.2 million units last year, with deliveries ramping up as supply chain pressures ease.

Meanwhile, car owners have felt the brunt of the inflationary environment, with figures from motoring body the Australian Automobile Association revealing rising fuel costs, increased upfront costs for purchasing new vehicles, higher interest rates on car loans, and increases in insurance premiums resulted in a 13.4 per cent increase in transport costs for the typical household in the year to September – 2½ times the rate of inflation.

According to the figures, transport costs now constitute 16.3 per cent of a typical household’s income, up from 15.1 per cent at the end of 2022.

Peter Kittle Motor Company chief executive Andrew Kittle, who operates dealerships in South Australia, Victoria and the Northern Territory, said the higher costs of car ownership meant used cars were back in favour with motorists looking to save money on the upfront purchase.

“Fuel prices are hurting and interest rates are hurting - the car that people could afford to buy comfortably six months ago they can’t necessarily stretch to the same value for the car now, because on a weekly basis it’s costing them more than it did six or 12 months ago, on top of their mortgage and on top of their weekly grocery bill,” he said.

“Used car values have come down from what they were two or three years ago, which is absolutely record highs, so affordability is coming back into it where people are saving a significant amount of money by going to used cars compared to new - that wasn’t always the case over the last 12 or 18 months.”

About 61 per cent of used cars are currently sold on the private market, according to the Automotive Insights Report, with the remainder sold by dealers.

Toyota was the top selling used car brand in 2023, with 16.6 per cent market share, followed by Mazda and Ford. The Ford Ranger was the top selling vehicle with 65,938 sales, pipping the Toyota HiLux and its 65,852 sales. They were followed by the Toyota Corolla, Mazda 3 and Hyundai i30.

Retained values - a measure of how well vehicles hold their value against original prices when purchased brand new - declined over the course of 2023, with utes and light commercial vehicles holding their value better than other vehicle types, and SUVs the worst performing segment across all age groups.

Mr Kittle said dual-cab utes remained the most popular used vehicles, while Australia’s love affair with the SUV was taking a hit as buyers downsized to more fuel efficient alternatives.

“The Toyota HiLux and Ford Ranger are the two we get asked about the most and people are looking again at potentially combining - where they might have had a work car for dad and family car, whether that becomes one dual cab ute,” he said.

“Obviously SUV popularity has exploded over the last five years, but we are seeing a little bit of downsizing, where people are potentially getting out of their bigger SUV into a smaller sedan, hatch or a smaller SUV to save money on fuel, and maybe recognise some positive equity they have in their previous car.”