If you’re looking to buy a used car, you’ve probably noticed the trend of soaring prices and declining supplies that began in 2020.
In fact, used car prices in Australia are at a record high.
That’s good news for car dealers and private sellers but bad news for anyone looking to buy a vehicle.
But how much more should you expect to pay for a used car in Australia?
Moodys, the credit rating company, has released data showing that the current prices of used cars are 34% higher than last year.
In other words, it’s more expensive to buy a car in Australia in 2021 than it’s ever been.
However, how much more you’ll pay will depend on the vehicle you’re buying.
For example, some vintage cars and four-wheel-drive vehicles are in high demand so you’ll have to fork out a lot more. The demand for four-wheel-drives is being driven by Australians looking to holiday locally instead of internationally due to Covid-19 related travel restrictions.
According to the latest AutoRadar reports from Cox Automotive Australia’s data solution division, the average prices being achieved by dealers for used cars has increased by $8000. (Source: https://premium.goauto.com.au/used-car-prices-up-8000-report/.)
So what’s the main reason for the price spike?
The high demand and prices in the new car market are pushing up the prices of used cars.
Here are some of the main reasons used car prices are up, and supply is down:
1. Global Production Shortages and Spike in New Car Prices
Since the lockdowns began last year, there have been global production shortages in the car manufacturing industry. These shortages have been fuelled mainly by colossal demand, closure of manufacturing facilities for Covid lockdowns, and a massive shortage of semiconductors used in cars.
Semiconductors are the microchips used in cars for features like safety systems and infotainment.
Early this year, BMW Australia announced the third round of price spikes in eight months. Most models went up $2000, but increased in price by up to $6000. The price spike was attributed to increased material costs, exchange rate factors, and additional features on new models. (Source: https://www.chasingcars.com.au/news/new-car-prices/bmw-australia-hikes-up-prices-for-the-second-time-this-year/#:~:text=BMW%20has%20raised%20the%20prices,a%20price%20hike%20of%20%242%2C000.)
Given the short supply of new cars, high prices, and long waiting lists for those who have ordered new vehicles, many Australians are choosing to buy second-hand cars as an alternative.
2. Increased Demand For Second-hand Cars
Since the supply of new cars is a problem, many Australians are opting for used cars instead. For those people whose income has been affected by the lockdowns, opting for more affordable vehicles makes sense.
Additionally, more and more Australians are choosing to buy cars and travel privately rather than hop on a train or bus.
3. Fewer Trade-ins and Used Cars on The Market
Many companies that normally sell their fleets are keeping their vehicles longer than usual. This is because government-mandated lockdowns have helped keep the mileage of these vehicles down.
As a result, fewer trade-ins are coming on the market, so used cars are in shorter supply, which also contributes to the higher prices.
Advice for Buyers
If you’re looking to purchase a used vehicle for yourself or your business, it’s essential to have your ducks in a row from the start. That way, when the right vehicle becomes available, you won’t have any delays making the purchase or risk losing out to another buyer, afterall it is a seller’s market.
The smart thing to do would be to get your vehicle finance arranged quickly, especially since supplies are limited and waiting lists are long.
Keep in mind that financing your vehicle through a traditional bank will likely be a long and arduous process. There are lengthy application forms to complete and hoops to jump through before you are considered. By then, you may have lost the vehicle to another buyer.
Why not finance your vehicles through CFI Auto Finance instead?
The application process is a breeze!
Once you’ve found the right vehicle, simply apply online in just a few minutes.
Then choose your finance solution and terms; you’ll usually be approved within 24 hours.
Once approved, you sign your contract electronically, your vehicle is paid for and you can take delivery – it’s that simple.
Click the button below to get a quote:
