Used car prices spike during pandemic
It’s a seller’s market for second-hand vehicles as low stock levels drive price increases.
Used car values have risen sharply in the wake of the COVID-19 pandemic with industry experts suggesting the combination of constrained supply of some new models, reduced use of public transport and people holding onto their cars longer is driving the price rises.
Leading online listings website Gumtree Cars, which claims to “have more privately listed cars than anywhere else”, said average listing prices for used cars were up 16% on 2019 prices for cars priced below $200,000.
Describing the current market conditions as a “seller’s market” a statement from Gumtree Cars attributed the strong price rises to a shortage of second-hand car listings due to sellers holding onto vehicles in response to COVID-19.
Listings of second-hand vehicles on the site in August were down 23% compared with the same month last year as consumers recovered from economic concerns associated with the pandemic.
Gumtree reported a sharp rise in demand for second-hand vehicles in the third quarter of 2020, with 165 million searches on its website during the period, representing a 7% increase in the second quarter.
A spokesperson for Gumtree Cars said with consumer confidence rising as the impact of COVID-19 pandemic lessened, anyone in the market for a second-hand car could be paying a premium.
Analysis of the Gumtree Cars site indicated the average listing price for a second-hand vehicle was $10,811, up 16% on last year for all vehicles priced at less than $200,000.
Nationally, the top five most-listed car brands were Toyota, Holden, Ford, Nissan and Mazda while the premium market has seen a surge in listings, up 16% for brands like Lexus, Mercedes-Benz, Audi and Land Rover.
With Victoria’s economy hammered by the impacts of its strict COVID-19 lockdown, Queensland surged into second place behind NSW as the state with the most active second-hand vehicle listings, accounting for 18.4% of national listings versus NSW’s 33.6%.
Other key findings for Queensland include the fact that second-hand vehicles were slightly younger than the national average, with an average model year of 2006 versus the national average of 2005.
The Holden Commodore, Toyota HiLux, Toyota LandCruiser and Ford Falcon were the most popular car models listed for sale in Queensland, with white the most popular colour.
Gumtree Cars spokesperson David Low said renewed consumer confidence in the second-hand vehicle market contradicted predictions of an economic downturn.
“Currently, it is a seller’s market with reduced listings and increased demand making now a great time to sell your vehicle,” Mr Low said
“The data also shows that Australians are holding onto their vehicles longer with the average vehicle lifespan being model year 2005, showing that vehicles are lasting longer thanks to improvements in safety and technology.”
“I think people are feeling pretty wealthy at the moment just because of the cash they have and the low interest rates, which means they are buying cars.”
Mr Slattery said the demand for used vehicles had caused a shortage of supply and a subsequent spike in prices.
“It's sort of become this self-fulfilling prophecy where people have the funds and the finance and are trying to get cars but it’s become more difficult to get the cars, so the prices are just continually spiralling upwards,” he said.
Mr Slattery expected the demand for used cars to continue into 2021.
“We are finding it hard to get stock at the moment, which is an industry-wide issue,” he said.
“This is normally what happens at the peak of the car market, which is around the end of January.
“The car market is going to continue to be very buoyant, particularly over January and February.”
Mr Slattery said the rise in prices for used vehicles meant the new-car market was offering better value to buyers.
“I feel at the moment you are better off capitalising on the strong second-hand market and buying new,” he said.
“I've done this myself. I typically buy second-hand cars, but I sold my wife's car and went and bought a brand new one because there's better value for money with new.”
STORY BY GED BULMER AND RAY ANDERSEN