Used-car prices keep rising as Australian manufacturers face ongoing supply issues

Wholesale used-vehicle prices across Australia have continued their seemingly unstoppable upward trend throughout the first quarter of 2021, with gains linked to supply constraints and steady demand across the market.

According to the Datium Insights-Moody’s Analytics Price Index, used-vehicle prices are 37 per cent above the pre-pandemic high set in February 2020.

The Australian this week reported that the typical cost of a 2018 Toyota Camry sold at auction in NSW has increased from around $26,000 to just under $30,000 in less than a year, while the price of a similarly aged Ford Ranger has lifted from $32,000 to around $39,000.

“Prices are not expected to revert to pre-pandemic levels, as they will remain elevated throughout the second quarter while supply pressures and steady demand keep the market hot,” Moody’s Analytics auto economist Michael Brisson said.

“There is expected to be some pullback in prices in the third quarter, but price levels are projected to remain rather flat once the corner is turned.”

The main cause for the most recent spike is the global shortage of semiconductor chips, as reported by AfMA late last month. Production problems came to the market in late 2020, when new-vehicle sales began to rebound from the pandemic more quickly than expected – causing a flow-on effect with suppliers.

But Mr Brisson stressed that while market prices will eventually settle, relief could be months away.

“Prices of durable goods do not usually crash back like commodities. It takes time and energy for dealerships to go out and change the prices on vehicles. However, the market is overvalued and will take time to recalibrate.

“The most likely scenario for this recalibration is through an extended period of limited price growth over the medium term. What this means for individual vehicles is a return to a more normal rate of depreciation.”

Are you experiencing delays in getting new vehicles into your fleet? AfMA would love to hear from you. Click here to send us your thoughts.