Cox sees used car pause

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COX Automotive Australia is reporting that it is seeing growth in used vehicle sales volumes by dealers, running in parallel to the records being set in the new vehicle market. 

Drawing on the company’s substantial database of in-dealer used and demonstrator listings, as well as wholesale market data from its Manheim Australia auctions business, the company said growth was more a result of improved vehicle supply and the subsequent reduction of big dealer order banks than ongoing customer sentiment. 

In an introduction to the company’s Market Insights Report for Q3, Cox Automotive Australia CEO Stephen Lester said that the number of active used and demonstrator vehicles for sale in dealerships has grown steadily over the course of 2023.

Current dealer active volume in the Cox Automotive Australia (Cox) database is up 19.5 per cent over the same point in 2022 and a steep 28.8 per cent since the start of 2023.

Cox Automotive Australia CEO Stephen Lester

But Mr Lester added: “We did see a dip in September and a subsequent 1.1 per cent decline in Market Days’ Supply compared to August. 

“At the same time we are also seeing a general, steady decline in average used vehicle prices as per our Cox Dealer Delisted Price Index, with the overall market now sitting 8.8 per cent lower than this time last year.”

The Cox price index uses December 2019 as its 100-point and it now sits at 134.9. 

“Dig a little deeper though and you can spot a pretty clear pattern across passenger, SUV and light commercial segments: Namely, the older the vehicle, the higher its current price index relative to the baseline tends to be. 

“Why? Wider economic headwinds such as interest rate increases and inflation that outpaces wage growth have yielded a stronger market for older and traditionally more affordable used vehicles, keeping their prices proportionately higher than younger and generally more expensive vehicles,” Mr Lester said. 

“On the wholesale side, our Manheim in-lane and simulcast auction volume for September was up more than 25 per cent over the same time period in 2022, despite a small slip of 3 per cent over August. 

“We’ve also seen our wholesale price index fall 15 per cent over the past 12 months and more than half of that (8 per cent) came between August and September – with pickups a notable exception, bucking the trend and increasing their average prices across the month. 

“Regardless, vendors should keep in mind that expected prices are down from their 2022 highs” he said. 

“While our sample size of electric and plug-in hybrid used vehicles remains proportionately low, just 0.5 per cent of dealer used and demo listings and 0.2 per cent of wholesale vehicles up for auction, we did see some early signs of improvement in residual values, at a dealer level in particular. 

Referring to new car sales, Mr Lester said “the Australian new vehicle market looks incredibly strong, posting sales records in four of the past five months. 

Sales were up 18.3 per cent over September 2022 and sit 10.9 per cent higher year-to date. With nearly 900,000 PCV sales over nine months, the market is poised to set a new all-time record. 

“But there is a shadow over this figure; namely the fact this is a result of pre-sold vehicles arriving in the country and being delivered. Dealer sentiment in regards to forward order writes seems to be softening, based on what our team are seeing out there in the market. 

“Of particular importance to Manheim, we are seeing faster growth in volume on the fleet side than the overall market, as businesses secure the supply they need to replenish their vehicles and remarket their old ones.” 

Mr Lester said EVs now account for around 8 per cent of new vehicle volume, about the same penetration as the United States, while combined EV, PHEV and regular hybrid sales now account for nearly 20 per cent of the market.

Highlights from the Cox Market Insights Report for Q3: 

Top selling used passenger cars 

The leading used passenger cars this year are the Toyota Corolla (up 11.1 per cent YTD), Hyundai i30 (up 16.6 per cent), Mazda 3 (down 3.3 per cent), Holden Commodore (down 10.7 per cent), and Kia Cerato (up 28.1 per cent). 

“We will in all likelihood see fewer used passenger (non SUV) vehicles entering dealer lots and the Manheim car auction lanes moving forward, as a knock-on effect of their diminishing new-vehicle market share.

“If consumer demand remains higher than eventually decreasing market supply then prices will remain comparatively elevated. It’s also worth noting that four of the top five selling used passenger cars belong to the Small Car segment, which accounts for the lion’s share of passenger car sales – something changing as more EVs such as the Tesla Model 3 begin to enter the market at scale. 

Top selling used SUVs

“Much like Small Cars dominate new and used passenger sales, Medium SUVs dominate that market, occupying four of the top five spots. Sales of the Toyota RAV4 are well up this year, by some 29.1 per cent. This makes sense considering where that vehicle sits in its lifecycle, with plenty of early examples of the massively popular current-generation model (hybrid included) now returning to find second homes.

“The Nissan X-Trail (up 20.5 per cent) as a popular fleet vehicle is in hot demand as a value used buy, ahead of close rivals the Mazda CX-5 (with a private buyer skew) and Mitsubishi Outlander (bigger with fleets than the Mazda). The Toyota Prado is the number three used SUV, up 16.8 per cent YTD. 

Top-selling used utes, vans & buses 

“The composition of the used pickup market is unsurprisingly led by Ranger and HiLux in both gross and percentage terms. Given expected rates of attrition, expect the now-discontinued Holden Colorado and the Nissan Navara to be overtaken by vehicles that have been bigger sellers when new over the past few years; namely the Isuzu D-Max and its badge-engineered Mazda BT-50 twin.

Active used cars & market days supply by type

“Our used passenger car active in-dealer count is up 43.1 per cent since the start of 2023 whereas market days supply (60 days) is up only 9.1 per cent. Likewise, SUV supply is up 36.4 per cent over the course of 2023 while market days supply remains 63. 

“A somewhat different pattern emerges when it comes to used pickups and vans. Pickup inventory is up 15 per cent while market days supply is down from 63 days in January to 62 days in September. Van and bus volumes in dealer used car lots are up 24.4 per cent but market days supply is unchanged at 66 days. 

“The recorded inventory of used EV and PHEV models is up 58.8 per cent this year, with added volatility coming by virtue of it coming off a low base. 

“Market Days Supply in September fell to 66 days, down from a high of 77 days in July 2023.

By John Mellor

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