More new cars coming into Australia
Key to the unprecedented boom in used car values was a shortage of new vehicle stock.
The car market is a relatively simple beast driven by supply and demand.
If a particular model is in hot demand – with more buyers than vehicles available - it’ll typically sell at higher prices with discounting limited or non-existent.
Conversely, if there is excess of brand new cars, manufacturers will generally discount prices to shift them.
Since mid-2020, because of issues triggered by the pandemic, many mainstream brands have had a shortage of new car stock.
So, those once-common ads offering thousands of dollars off the sticker price or discounted finance – among other deals – mostly dried up.
But the car market is returning to normality, according to Ross Booth, the General Manager of car valuations giant Redbook.com.au.
“New car supply is starting to get more consistent,” says Booth. “There are still long waiting lists for some vehicles, such as Toyota hybrids, but as a general statement, new car supply has certainly freed up.”
Used car market is cooling
Having healthier supply in the new car market has a direct effect on values in the used car market.
While there are still pockets of strength in the used car market – especially with some in-demand off-roaders – Booth says the result is a “general downturn” of prices. He says the market still has some volatility, but since mid-2022 there has been an easing of used car prices as a more typical used car depreciation pattern kicks in.
“It’s 10-15 per cent down, we estimate,” says Booth, while cautioning there are variations across the used car market and specific brands.
“We are seeing more normalised conditions. So, supply coming back and … flowing to new cars which means used cars are coming down.”
Used car prices can depend on the market segment you’re shopping in.
Matthew Wiesner is the managing director of the Sime Darby Group Australia, which owns dealerships from a diverse range of brands.
He says the used vehicle market is still very competitive below $40,000, with strong demand - especially for Japanese and Korean models that have a reputation for value and reliability, something that ensures they are commanding healthy prices.
But he says there are opportunities elsewhere, especially in the prestige realm.
“For those who can afford that end of the market there’s certainly more competitive opportunities in that space than what there were 12 months ago.”