Used car prices boom as new car sales bust

I reported yesterday how Australian new car sales have collapsed to 2003 levels after recording 30 consecutive months of falls:

This data is supported by the ABS’ trade data, which shows that the annual value of car imports has collapsed 22% from their April 2018 peak:

Perversely, while new car sales (and car imports) are crashing, used car prices are soaring according to CommSec:

Demand for second hand cars remains firm during the pandemic with Aussies preferring to drive their own cars rather than catch public transport due to health concerns. But the supply of vehicles remains volatile – lifting 7 per cent last week after falling 10.4 per cent in the prior week…

Data analytics firm, Datium Insights, provides a weekly report on the used vehicle market. In the week to October 2, used motor vehicle prices rose by 4.4 per cent after rising 2.1 per cent in the previous week.

In the latest week supply rose 7 per cent after falling 10.4 per cent the prior week. Clearance rates rose 1.1 per cent. Datium notes that “stock remains considerably low.”

While CommSec believes the aversion to public transport is causing the surge in used car sales, a more logical explanation is frugality.

That is, buyers have shifted their preference away from new cars towards used cars in a bid to save money, in the process driving used car prices up.

Leith van Onselen
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Comments

    • Your typical suburban bogan hoon could be sitting on a goldmine.
      Commodores ARE the bogan hoon car of choice.

  1. innocent bystanderMEMBER

    a more logical conclusion, as pointed out by several posters yesterday, is that new cars are unavailable (or a long wait list/time due to supply chain disruptions) – at least for the recent (6 months) downturn in new cars, not saying other factors such as frugality not in play before/now.

    • Yes, and not just passenger vehicles, ag too. Tractor and ag equipment supply chain disruptions, delays to delivery of new machinery and parts. Used stock is being snapped up fast.

    • New car buyers retaining their cars for longer so not upgrading therefore less demand for new cars and consequently reduced supply of quality used cars.

      • innocent bystanderMEMBER

        respectfully disagree.
        a lot of ppl who want to buy new can’t get them.
        sure, there is some frugality going on, but also supply chain disruption.
        what is the mix? data doesn’t say.

  2. Brother in law purchased a Holden Ute 3yrs ago for $14,000. He is now selling it and has had offers for $18,000.

    • I was looking at an article about Chevy Silverado, which is a US truck with a massive V8, bigger than a Hilux. They bring them in here and convert them by hand to RHD. In the US, they cost USD 27-57 K; here they cost AUD 133-142 K. Apparently there is plenty of demand. I think they also bring in similar Ford and Dodge RAM trucks. Almost sounds like the basis of an industry.

  3. Pauly 📡MEMBER

    Have just traded in my 2012 FJ cruiser for 27k, paid 32k for it 6 years ago. Bought a new hilux off the lot (someone ordered and their finance wasn’t approved).

  4. Ordered a new car and at the time did a Carsales valuation of my existing car. New one is now here 6 weeks later so ran the same again and the price has gone up $1500. Thanks for coming!

    • innocent bystanderMEMBER

      yeah, a friend bought one sight unseen and got the first delivery here in Perth. had to wait tho.
      by the time it got here she could have made good money on-selling it. in fact the dealer tried to charge more than the agreed purchase price.

  5. adelaide_economistMEMBER

    I find the new car market incredibly expensive. I was assured that having a domestic car industry wasn’t forcing importers to compress their prices and yet here we are with no car industry and a mazda 3 now costs $45k (with newly reinstalled back to the 80s torsion beam axle) and tradie pickups regularly go for $70k for mainstream models.

    • ignoratio elenchiMEMBER

      Which Mazda 3 goes for $45K? The supercharged one or the Hybrid? I suspect that the naturally aspirated ones are the better sellers and they cost between $25K and $35K

      Tradie-Spec utes are available from $25k. The ones that go for $70K are driven by the suits with Utes.

      If you look at new car prices as a function of salaries however, they appear cheap. When I started work in 1993 the average salary was $29K and the Ford Falcon GL was $32K (I know this because I bought one years later and the sale price was recorded in the owner’s manual). Now apparently the AWOTE is $89K – and for that you can get 2 of your high-priced Mazda 3s

  6. “…Australian new car sales have collapsed to 2003 levels after recording 30 consecutive months of falls.”
    You could easily draw the opposite conclusion if you looked at AP Eagers (ASX: APE) share price today. The question is, what is driving it up so strongly from the March lows?

  7. Clearly there is a skills shortage in cars and we need to import some diversity. It’s not like the reasons given for regulations against importing cars are still valid.

  8. Mick PesloMEMBER

    Looking to buy a new ride on mower – factory in Brisbane, delivered to Bundy. Six weeks minimum. Looking at a shed too (five months from deposit to maybe getting the keys) just took six weeks to get a plumber to give us a gas safety cert. Two months minimum to get the roofing iron and gutters replaced. Asbestos ceiling can’t be removed until February. Been hanging in the shadows since the days whocrashedtheeconomy.com had a decent forum (2008) and quite amazed things keep on keeping on despite the obvious. Sigh.
    .