Used-car prices on the up

Used cars are in increasingly hot demand with prices climbing in Australia and the UK, according to the latest figures.

A new report reveals used-car prices in Australia in July 2020 were 30.8 per cent higher than during the April slump in sales. The data from Moody’s Analytics shows the amount people were paying for used vehicles was up 16.2 per cent on pre-pandemic prices.

“To put that in perspective, used-vehicle prices rose only 23 per cent from the depths of the 2008-2009 global financial crisis to the beginning of 2020,” says the report.

The climb in prices across the ditch is being attributed to buyers wanting to avoid public transport, more people choosing to drive rather than fly for interstate travel, and new car dealers facing stock shortages.

As a result, demand for used cars has outweighed supply and wholesale prices have increased across the board, reports the Car Advice website.

Moody’s Analytics says it’s best to “expect the unexpected” when it comes to how used and new-car prices will fluctuate for the rest of 2020. “Prices for 2020 likely peaked in July, but will remain elevated compared to 2019,” it adds.

However, used-vehicle prices are tipped to soften over the coming months as more sellers enter the market to take advantage of high prices – thereby easing supply constraints.

Falling consumer confidence in the wake of Covid-19 is also expected to keep demand “muted”.

‘Encouraging’ signs

Meanwhile, average used-car prices were 6.2 per cent higher in the UK in the week starting August 10 than during the same period of 2019.

The figures represent 15 weeks of consecutive price growth and are based on cars being sold by about 12,500 retailers advertising through Auto Trader.

Vehicles with internal combustion engines are leading the charge, partly because of high demand and lower supply in the market. Prices for petrol cars increased 6.9 per cent year-on-year and diesel prices climbed 6.3 per cent. 

Cars aged 10 to 15 years enjoyed the largest price growth, increasing 10.3 per cent in over the same time frame. They were followed by cars between five and 10 years old, which increased 9.1 per cent from a year ago.

Richard Walker, director of data and insight at Auto Trader, says: “It’s encouraging to see that over two-and-a-half months after forecourts were permitted to reopen, and with stock levels slowly returning to normal, prices have continued to climb. 

“This is a result of the surge in consumer demand which shows no sign of slowing in August … based on the exceptionally strong consumer metrics we’re observing on our marketplace, we’re confident that used car sales and prices will remain buoyant in the coming weeks.”