If you’ve found that used vehicles have been a lot more expensive recently, you’re not alone, as a new study from Moody’s Analytics has revealed their prices are at an all-time high.
According to the financial intelligence company, used-vehicle prices across Australia reached a fourth consecutive all-time high in October 2020. In fact, they were 32 per cent higher than were in October 2019.
That said, the rise and rise of used-vehicle prices actually slowed in the past two months but remained above two per cent month over month, which is 10 times higher than the average monthly growth in the past 10 years.
So, how long will this trend continue for? Moody’s Analytics auto economist Michael Brisson said: “Going forward, used-vehicle prices will flatten through the end of the year, giving back some gains in the first quarter of 2021.
“The slowing of growth that has occurred in each of the past two months will continue, and all-time highs will stop being reached by the end of the year as perfunctory limits on growth are reached.
“As the economy continues to recover, prices of wholesale used vehicles will begin to normalise.”
Mr Brisson stressed “there is a limit to how high prices rise before consumers turn to other options, and the used-vehicle market has quickly approached this level”.
He therefore explained these used-vehicle price rises aren’t sustainable, as the point where buyers will instead buy a new vehicle for a comparable price is already a reality in some instances, with classics the exception to the rule.
And if it wasn’t already obvious enough, Mr Brisson noted this “demand for private transportation (including used vehicles) is being driven by fear for one’s own health on public transportation and air travel” during the coronavirus (COVID-19) pandemic.
At the same time, though, he added: “Supply of used vehicles remains well below long-run trends as new-vehicle sales continue their two-year-long slump,” which in turn further increases their prices.