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Used-car prices are decreasing across the country as new car availability slowly returns to normal, a report has found.
It’s the sixth consecutive month used-car prices have fallen according to the data supplied, but the cost of buying a used car is still well above where it was before supply chains were ravaged by lockdowns and the Covid-19 pandemic.
The research undertaken by Michael Brisson, a senior economist for Moody’s Analytics, shows used-car prices are generally 55 per cent higher than they were before the pandemic began, although they fell 2.4 per cent between October and November.
Prices are currently about 7.2 per cent higher for used cars than they were a year ago, although this is significantly lower than when they were 19 per cent higher in January 2022 compared to January 2021.
As had been made evident during the events since 2019, the semiconductor shortage driven by manufacturing disruptions was a primary indirect driver in the increase in used-car prices, though the report from Moody’s Analytics warns that prices aren’t expected to return to pre-pandemic levels.
“Limited inventories for new vehicles sent consumers to the used-vehicle market, driving up prices. Although production has not returned everywhere, the situation has improved.
“Used-vehicle prices are expected to continue their broad-based declines over the near-to-medium term as inventories rise and demand wanes… Still, valuations are not expected to come back to where they were before the pandemic.”
The economic report also highlights that a higher cost of living has likely priced some buyers out of the car market, although the higher cost of new cars means used cars are still likely to be in enough demand that prices are unlikely to drop dramatically for some time.
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