Have you taken a look at the used car market lately? You may have noticed the great deals that can be found—and there’s a good reason why.

The Australian new vehicle market has been shattering records over the past four months with deliveries of cars finally starting to make their way to customer driveways. But this isn’t the only outcome of these stock shortages: it has also started to affect used car prices,.

Thanks to data from vehicle data and re-marketing firm Cox Automotive Australia, we now know that there has been a marked increase in used and demonstrator vehicles listed at dealers—up more than 30 per cent in 2023 so far, as well as 22.5 per cent over the same point in 2022.

Used car listings are up more than 30 per cent this year. Credit: RL GNZLZ/Flickr

At the same time, financial intelligence company Moody’s Analytics have reported that overall used vehicle prices are 11.3 per cent lower than a year ago and 15.2 per cent lower than at their peak in July.

The data suggests that private buyers and fleets are taking delivery of their overdue vehicles and trading in or wholesaling older stock, which now makes its way to the pre-owned market.

Still, the prices are 49 per cent higher than the pre-COVID level in August 2019 and 41.1 per cent greater than the ‘base period’ of December 2019.

Even though inflated, the index is down 5 per cent from its high point in August 2022 and 4.2 per cent over this year. Forty per cent of sellers also lowered the price of a used vehicle listing at least once by an average of 7.1 per cent.

Why is this the case? The answer is fairly simple: The demand for older vehicles is dropping as more of the population looks to tighten their belts due to ever-growing cost-of-living pressures.

So, if you’re in the market for a used vehicle, this could be the perfect opportunity to get your hands on a top-notch model without breaking the bank.

But which vehicles provide the best value? The answer: later-model or newer used cars.

The patterns are evident: the older the vehicle, the higher its price index. This may be because it’s easier to source newer stock, which still offers a great value and can be found at relatively less inflated prices—but doesn’t come with the same short supply as older vehicles.

Cox Automotive data, for example, shows that while second-hand SUVs aged under two years are on average 19.7 per cent more expensive than pre-COVID, those aged 5-7 years sit at 35.1 per cent more expensive, and those aged 8-10 at an average of 40.3 per cent more expensive.

The same trend affects passenger vehicles and pickups too.

What’s more, Cox’s data on the Manheim wholesale auctions reveals volume growth in August of 15.6 per cent over July and 29.4 per cent over year-on-year—suggesting there may be more bargains to be had.

Regarding used electric vehicles (EV), resale values remain a concern due to buyer scepticism over battery health, government rebates and tax breaks focusing on new cars, and early adopter preference for the latest technology in a fast-iterating segment.

The pool of EVs in the used-vehicle market is still small, comprising only 0.5 per cent of the listings.

This follows a report that the price of used vehicles in Australia has fallen by 13 per cent. You can read more about that story here.

Key Takeaways

• The Australian new vehicle market has seen a record rise in deliveries, causing an increase in used vehicle stock at dealerships.
  
• Vehicle data and remarketing firm Cox Automotive Australia reported a 30 per cent increase in used and demonstrator vehicle listings at dealers in 2023.
  
• Financial intelligence company Moody’s Analytics reported used vehicle prices are down 15.2 per cent from July and 11.3 per cent from last year.
  
• Used vehicle prices are still 49 per cent higher than pre-COVID-19 levels, but the same data shows more than 40 per cent of sellers have reduced the price of a used vehicle listing at least once.
  

Bottom line: if you’re in the market for a used vehicle, this could be the perfect opportunity to get a great value car—new or old—without breaking the bank. Do your research and make sure to take advantage of these once-in-a-lifetime deals!

Have you noticed this trend, members? Share your thoughts in the comments below!

 

[Mr Chips]

Something to remember when buying a used car, the dealers have a markup of a minimum of $2,000.00 per vehicle up to $4,000.00 for a 5-year-old then around $7,000.00 for newer late model vehicles depending on the brand and type. For instance, a 2-year-old Bentley Mulsanne would have a much more severe markup than a Ford Focus of the same era, The dealers know that they will normally have to give some sort of discount or, an over-allowance for a trade-in at the time of sale. This is generally the most difficult part of the price negotiation. The dealers don't really care that much about reported market values but they do use them to increase the margins. Percentages to a dealer are only interesting after the sales have been completed.