Used car prices are booming

The price of used cars is surging due to a lack of supply following the pandemic.

As reported by CommSec earlier this week, used car price are up around 40% on a year ago:

So far in April, used car prices are up 2.4 per cent on March. So prices remain around 40 per cent up on a year ago…

This is the highest rate of appreciation for a series that goes back to 1999. Car prices rose by 38.1 per cent, while truck prices increased by 44.5 per cent. Vehicle retention value, measured as price/MSRP, rose by 39.3 per cent compared with a year earlier, with the car component increasing by 35.7 per cent and the truck component rising by 42.7 per cent…

The higher prices for used cars are causing buyers to favour new models – that is, if they can secure the stock. The global car market remains tight due to production problems – in large part due to shortages of key computer chips…

Used car prices

Used car prices are booming, up 40% year-on-year.

Today, The ABC reports that Aussies are increasingly falling prey to online scams targeting car buyers:

“Any quality cars that are good for resale have spiked by 20 or 40 per cent,” [Rockhampton used car salesman Greg Sutton] said…

The rise in online purchases has led to an explosion in dodgy scams and it’s prompted a warning from the Australian Competition and Consumer Commission (ACCC)…

“As second-hand car sales increased during the pandemic, unfortunately so did the vehicle scams,” [ACCC Deputy Chair Delia Rickard] said…

“Our advice to anybody who is buying a vehicle is to stick with established channels – either buy with dealers or established third party sites.”

The used car market has been hit by a perfect storm of factors that have driven prices up. These include:

  • The shift of population and work away from central cities to the suburbs and regions; and
  • The collapse in new car supply owing to semiconductor shortages and reduced staffing across production plants for social distancing reasons.

I guess I will be sticking with my 15 year old Ford Falcon for a few more years.

Unconventional Economist

Comments

  1. Hey Leith.. those BA Falcons are very good cars. I have a BA wagon running on factory dedicated LPG. They admittedly pretty unrefined but super reliable and practical, comfortable, easy to fix/service and costs virtually nothing to own & run. The perfect vehicle for these recessionary times.

  2. Ha …. my youngest sons first drive is a 2003 BA falcon work mate ute he scored less that a year ago for 1.5K and already has had offers of 4k. Probably keep it for another 6 mo – year and then move on to a 90s model Toyota/Land Cruiser 4X4.

    OK from my view point and contacts the whole used car event is a wee bit more complex than just supply side/demand issues. First and foremost is maintenance and road costs across personal balance sheets E.g. DIY/local mechanic with various sources of parts supply I.e. not ex overseas or intrastate parts lag time – ever lost or damaged a Q7 key fob lmmao …

    Fear[tm] … Global JIT supply lines with long information leads times, in a pandemic setting, attune buyer thoughts more than price alone, which, in our currant atomistic individualism [freedom] market based transportation reality means people will pay a premium to keep that perspective alive in the near and far term or feel[tm] exposed and vulnerable for various reasons – personal or group.

    Per se my son had a moment of late where his lower right front control arm and rim where damaged, OEM part was 500 bucks, he sourced a HD part for 150 on the internet and with some sharing from mates on tools replaced it in a few days with only having to get an alignment at a shop. This is repeated with me showing how to replace his rear disk pads without having to bleed the whole system. Not to mention I’m going to replace my rear universal joint on my 2005 Toyota work ute in a moment for under a 100 bucks because I have the tools and the knowledge E.g. I don’t need a corporation servicing its ***share holders*** [excuse for executive remuneration (unearned) profits] to have a life ….

    BTW has anyone read Keynes or Kalecki without attempting to bend it out of context for some reason – ?????

  3. 4×4 values gone up like mad. I assume it is lack of international holidays. Mine is worth 50% more now than when I bought it 10 years ago. That’s crazy.

  4. I saw a video from the NFSA on old rust bucket unsafe cars in the 1960s. They said Strayan’s hang onto their cars whilst the Yanks scrap theirs after a few years when the big bills come due. The idea that they could buy a new car cheaper than fixing the old one, just blew my mind. There was a saying “If you can’t afford a new Porsche/Ferrari, then you Definitely can’t afford a used one”.

    • Hi kms and age doesnt necessarily equate to high repair bills, unless its Euro brand of course. If you buy toyota or another established japanese car, if you look after it is should serve you well over 15 years and 250,000kms before big ticket items pop up. the problem is not all people know how to or car to look after a car to extend its longevity.

      • working class hamMEMBER

        A lot of cars these days can’t even be repaired by local mechanics. Basic services are ok, but a lot of systems are designed to be replaced only, not repaired.

    • Average vehicle age in the USA is about 12 years, in Australia about 11 years. There’s not much in it.

      (Cars are much cheaper to own and run in the US as well, generally speaking.)

  5. Late last year sold my 12 year old Petrol Toyota with > 300k’s on clock. Now wish I’d kept it as a second car workhorse. Nothing done to it & in good order. Made a big mistake. Saw it in the city a few weeks ago & looked awesome. Roof racks & all!! So silly. Probs would’ve got 10k more now!!

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