The rampant growth of Australian used car prices is slowing down.
Data from Moody’s Analytics reveals the value of wholesale used cars grew 1.0 per cent from October to November, after jumping by between 6.0 and 12 per cent month-on-month earlier this year.
Prices also fell in the most popular ute and SUV segments, but wholesale used-car values remain more than 30 per cent higher than at the same point in 2019.
“The November price divergence between passenger cars and larger vehicles has happened because trucks and SUVs have begun to approach a price ceiling,” the latest Moody’s Analytics report says.
“It could be said that this is no longer your father’s used-car market where 20 per cent of the vehicle’s MSRP was lost when driven first off the lot. In November, and a bit more so in October, many low-kilometre utes were selling for more than 95 per cent of their MSRP.
“Still, prices of these larger vehicles remain incredibly high compared with 2019 despite the slight pullback.”
Driving this year’s significant price growth is COVID-19. The pandemic has seen new car sales drop significantly in Australia, meaning fewer vehicles are being traded in and hitting the used market.
With lockdowns preventing movement, particularly in Victoria, fleet mileage is down and fewer ex-fleet vehicles are being sold compared to in previous years.
Moody’s also reports more people are extending their current vehicle leases in 2020, removing another source of cars for the used market.
The price growth of 2020 isn’t sustainable, according to the Moody’s report. As fear about COVID-19 diminishes and summer hits, Apple movement data reveals people are returning to public transport faster than they are walking or driving.
“Public transit offers convenience and affordability to many people, and the reasons people chose to use public transit
before COVID-19 will again take hold once the virus is no longer a deciding factor,” the report says.
“This will lead to less overall demand for personal vehicles.”