From high gear to slow roll: Latest data reveals slowing down of used car price increases
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Over the past few years, the Australian used car market has been a rollercoaster ride for buyers and sellers alike.
With the onset of the pandemic, prices skyrocketed due to a perfect storm of supply chain disruptions and increased demand.
However, as people navigate through 2024, there's a glimmer of hope on the horizon for those looking to purchase a pre-loved vehicle.
The global conflicts that contributed to the price hike are beginning to settle, and April marked the first month this year where the growth in used car prices began to slow.
Moody’s Analytics had been keeping a close eye on the trends, and their Used-Vehicle Price Index for April revealed a mere 0.15 per cent increase, a stark contrast to the 1.8 per cent jump from February to March.
This modest growth is a breath of fresh air, especially considering that the index is now 4.9 per cent lower than it was a year ago.
Breaking it down by vehicle type, the used car segment saw a 1.1 per cent increase from March to April, while prices for used utes and SUVs actually dipped by 0.15 per cent.
The decrease in the overall growth of used vehicle prices was caused by the first decline in prices for utes and SUVs in 2024.
However, the rate of this anticipated downturn is expected to be slower than that of 2023.
The expected downturn in used vehicle prices was attributed to several factors.
Firstly, the supply of new vehicles is improving, which naturally eases the pressure on the used market.
Additionally, the lingering inflation and high borrowing costs that had been a thorn in the side of many consumers were likely to dampen spending, further contributing to the decline in used car prices.
However, it's not all smooth sailing ahead. Moody’s Analytics Associate Economist Catarina Nero warned that the forecast is still ‘susceptible to upward price pressures’.
‘Any additional disruptions in the supply chain, or prolonged issues stemming from the Red Sea situation, could compel car manufacturers to raise prices in response to escalated transportation costs,’ she explained.
‘Such adjustments would not only impact the new-vehicle market but would likely ripple through to the used-vehicle market as well.’
Despite the potential for fluctuations, the current trajectory is downward.
While prices were still 47 per cent higher than the pre-pandemic levels of April 2019, they came down 14.3 per cent from their peak in May 2022, presenting a window of opportunity for those looking to purchase a used car.
As used car prices are forecasted to begin a decline, offering potential relief to consumers, the Australian government is proposing a plan aimed at easing financial burdens for motorists.
This proposed initiative could result in significant savings for drivers, aligning with the trend of decreasing used vehicle prices.
This proposal, combined with the slowing down of used car price increases, could positively impact the wallets of Australian motorists.
Have you noticed a change in prices? Are you planning to buy or sell a vehicle soon? Share your stories and tips in the comments below!
With the onset of the pandemic, prices skyrocketed due to a perfect storm of supply chain disruptions and increased demand.
However, as people navigate through 2024, there's a glimmer of hope on the horizon for those looking to purchase a pre-loved vehicle.
The global conflicts that contributed to the price hike are beginning to settle, and April marked the first month this year where the growth in used car prices began to slow.
Moody’s Analytics had been keeping a close eye on the trends, and their Used-Vehicle Price Index for April revealed a mere 0.15 per cent increase, a stark contrast to the 1.8 per cent jump from February to March.
This modest growth is a breath of fresh air, especially considering that the index is now 4.9 per cent lower than it was a year ago.
Used car prices showed signs of slowing in April after a period of increase, contrasting with downward trends from the previous year. Credits: Shutterstock
Breaking it down by vehicle type, the used car segment saw a 1.1 per cent increase from March to April, while prices for used utes and SUVs actually dipped by 0.15 per cent.
The decrease in the overall growth of used vehicle prices was caused by the first decline in prices for utes and SUVs in 2024.
However, the rate of this anticipated downturn is expected to be slower than that of 2023.
The expected downturn in used vehicle prices was attributed to several factors.
Firstly, the supply of new vehicles is improving, which naturally eases the pressure on the used market.
Additionally, the lingering inflation and high borrowing costs that had been a thorn in the side of many consumers were likely to dampen spending, further contributing to the decline in used car prices.
However, it's not all smooth sailing ahead. Moody’s Analytics Associate Economist Catarina Nero warned that the forecast is still ‘susceptible to upward price pressures’.
‘Any additional disruptions in the supply chain, or prolonged issues stemming from the Red Sea situation, could compel car manufacturers to raise prices in response to escalated transportation costs,’ she explained.
‘Such adjustments would not only impact the new-vehicle market but would likely ripple through to the used-vehicle market as well.’
Despite the potential for fluctuations, the current trajectory is downward.
While prices were still 47 per cent higher than the pre-pandemic levels of April 2019, they came down 14.3 per cent from their peak in May 2022, presenting a window of opportunity for those looking to purchase a used car.
As used car prices are forecasted to begin a decline, offering potential relief to consumers, the Australian government is proposing a plan aimed at easing financial burdens for motorists.
This proposed initiative could result in significant savings for drivers, aligning with the trend of decreasing used vehicle prices.
This proposal, combined with the slowing down of used car price increases, could positively impact the wallets of Australian motorists.
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