Auto Express

New research shows used cars continue to get cheaper

Australian wholesale new car prices are down 12% from their May 2022 peak, as the broader supply chain returns to normal and demand for used cars cools.

The Q4 used car price report found used car prices have now fallen for seven straight months, and in January 2023 used car prices fell for the first time since May 2020.

Furthermore, used car prices are expected to continue to return to earth in 2023 as supply of new cars improves and demand weakens due to higher borrowing costs and inflation.

In other words, the two main factors driving the prices of used cars – demand for them due to the lack of availability of new cars and the abundant borrowing capacity of households – are negated.

These findings come from the financial intelligence firm Mood analysisprovides regular reports on used car wholesale prices using numerical price index models.

On the supply side, fewer people will switch to used cars with more new stocks entering the market. Vehicle production in Japan (our largest source of autos) was 35% above 2021 levels last October, and motor vehicle imports increased in Q3 YoY.

“In 2023, we expect that the supply of new vehicles will continue to increase, helping to relieve pressure on the used car market,” the report added Moody’s Analytics.

The report also concludes that China’s departure from the COVID-free policy would be a positive development for the supply chain: with short-term volatility following a rise in infections prior to regulatory activity. chain management before the pandemic returns.

On the demand side, the new car market is expected to weaken this year as Australian households are under pressure from rising interest rates: The Reserve Bank has raised interest rates by 300 basis points since May. 5 year 2022.

Naturally, this cools the housing market, which strengthens the borrowing capacity of those hunting for an upgraded car. Citing ABS data, Moody’s analysts forecast a peak-to-trough decline in home prices nationally of 13%, with the bottom occurring in mid-2024.

Australia’s GDP growth is forecast to cool down to less than 2.0 percent in 2023 from an estimated 3.5% in 2022, with weaker household consumption being a key influence – not only due to the ability to borrow but also to rampant inflation and wage growth below the CPI.

Overall, Moody’s believes used car prices will fall by more than 10% on average this year, although their data shows they are now about 54% higher than pre-pandemic levels. In other words, perhaps there is a new normal.

“Manufacturers will remain hesitant to oversupply the market due to the significant headwinds of the global economy. This should keep used car prices much higher than pre-pandemic levels, with price stabilization set to take place in 2024,” the report states.

“However, if supply returns faster than expected and consumer demand weakens significantly amid rising interest rates and higher cost of living, used car prices could fall. faster than the current baseline outlook.”

Of course, that depends on the type of vehicle and how competitive it is.

THAN: Australian used car prices have fallen for six straight months




Source by [author_name]

news7h

News7h: Update the world's latest breaking news online of the day, breaking news, politics, society today, international mainstream news .Updated news 24/7: Entertainment, Sports...at the World everyday world. Hot news, images, video clips that are updated quickly and reliably

Related Articles

Back to top button