The Australian new vehicle market has re-written record books in three of the past four months, as long-overdue deliveries start to roll off the ships and into customer driveways.
This is tied in to a marked increase in used vehicle stock on dealer lots, which should exert more downward pressure on prices.
According to vehicle data and re-marketing firm Cox Automotive Australia, the number of used and demonstrator vehicle listings at dealers in its database is up more than 30 per cent in 2023 so far, as well as up 22.5 per cent over the same point in 2022.
The Cox Automotive data isn’t the only information showing price cooling in the second-hand market. Financial intelligence company Moody’s Analytics reported recently overall used vehicle prices are 2.2 per cent lower than July and 11.3 per cent lower than a year ago.
The firm found used vehicle prices are also 15.2 per cent lower than their peak in May 2022, however, they are still 49 per cent higher than the pre-COVID level in August 2019.
The pattern suggests more private buyers and fleets are taking delivery of their overdue vehicles, and trading-in or wholesaling older stock which enters the pre-owned market looking for its next owner.
Cox Automotive’s Price Index, which tracks the price changes of used vehicles over time, sat at 141.1 points as of August 31. This means the average price of used cars is 41.1 per cent greater than the ‘base period’ of December 2019 – just before COVID changed the market.
While still inflated, this index is down around 5 per cent from its August 2022 high point, and down 4.2 per cent over this year. The same data also shows more than 40 per cent of sellers reduced the price of a used vehicle listing at least once, and by an average of 7.1 per cent.
Another thing the data shows us is later-model or newer used vehicles are selling at relatively less inflated prices than older stock, which remains in shorter supply and higher demand as more of the population tighten their belts due to ratcheting cost-of-living pressures.
Second-hand SUVs aged under two years are on average 19.7 per cent more expensive than the same sorts of vehicle were just before COVID (119.7 on the price index), whereas those aged 2-4 years are still 31.1 per cent higher than pre COVID, those aged 5-7 years are 35.1 per cent more expensive, and those aged 8-10 are on average 40.3 per cent more expensive.
The same patterns are evident on passenger vehicles and pickups too: the older the vehicle, the higher its price index. The better value is to be found on later-model used cars where’s there’s more supply and less demand.
While not as public facing, the same Cox Automotive Australia data also looks at the company’s Manheim wholesale auctions, which sell a lot of former corporate, government and rental fleet vehicles to dealers who use them to populate their used car lots.
Manheim says it recorded volume growth in August of 15.6 per cent over July and 29.4 per cent year-on-year, for its best result since March 2021. Its wholesale price index is down 12.7 per cent from the May 2022 peak.
So while wholesale used vehicle prices remain high, they’re coming down which means dealers should be charging less for them in turn.
In terms of used EVs, resale values remain a concern due to a number of factors including buyer scepticism over battery health, government rebates and tax breaks that focus on new vehicles, and early adopter preference for the latest technology in a fast-iterating segment.
The sample size of second-hand EVs remains small, given uptake on the new side only spiked in 2021 and these vehicles are yet to trickle into the pre-owned market at scale. Just 0.5 per cent of dealer-used listings in the Cox Automotive data are an EV or PHEV.
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