Cox: Used-car demand growing


AUSTRALIA’S new-car market buoyancy continued to flow over to the used-car sector with Cox Automotive Australia data showing dealer used vehicle sales are up by 6.9 per cent month on month in August 2023 and 13.6 per cent year on year.

Active used car and demo dealer listings were up 1.3 per cent in August compared with July, but higher than August 2022 by a healthy 22.5 per cent. They are also up 31.9 per cent on the beginning of the year.

“These factors are a key driver of ongoing price cooling across the used sector compared to the record highs of 2022 – albeit with significant differences across age brackets and vehicle types,” Cox Automotive Australia said in its latest Retail and Wholesale Used Vehicle Market Insights August 2023.

“The number of used cars retailed by dealers in August was the second-highest figure since November 2021, the highest being in June this year.”

But it said that retailers operating in the used market faced challenges.

“Beyond establishing the right customer-centric, omnichannel experience for buyers and sellers, they must maintain clear and concise stock profiles, implement ageing policies and expand purchase channels and supply chains,” the report said.

The sales are up but the data shows people in the used-car market are seeking different vehicle types than those buying new vehicles.

August used-vehicle sales saw fewer SUVs (46.3 per cent) and more passenger cars (34.1 per cent) than the new-vehicle segment which had a greater proportion of SUVs (56 per cent of the market) and passenger cars at just under 18 per cent.

Light-commercial vehicles made up 19.4 per cent of the used sector compared with 22 per cent of the new-vehicle market.

Cox Automotive Australia said that this mix was more reflective of where the new market was a few years ago.

Dealer used and demo SUVs aged under two years sold for 19.9 per cent more than just before COVID in December 2019.

Vehicles aged two to four years were 31.1 per cent more expensive; those aged five to seven years were 35.1 per cent more expensive; and those aged eight to 10 years were 40.3 per cent more expensive.

Cox said that the pattern was similar for passenger vehicles (sedans, wagons and hatchbacks), which were on average 26.5 per cent more expensive aged under two years than the same types of vehicles were before COVID; 42.3 per cent more expensive aged two to four years; 52.1 per cent more expensive aged five to seven years; and 69.7 per cent more expensive aged eight to 10 years.

“As the market share of SUVs grows ever higher on the new vehicle side, the resultant shortfall of second-hand non-SUV passenger vehicles down the line creates a supply and demand imbalance which inflates prices,” the market insight said.

Light-commercial vehicles aged under two years were an average of 25.5 per cent more expensive than December 2019; those aged two to four years were 34.8 per cent more expensive; those aged five to seven years were 43.5 per cent more expensive; and those aged eight to 10 years were 55.4 per cent more expensive.

“This pattern is consistent: ‘Newer’ used vehicles are, as a proportion of their price, far less inflated compared to 2019 than much older vehicles, which continue to hold onto their value very well – potentially a result of ongoing financial pressures forcing consumers to lower their budgets, increasing demand for cheaper cars,” the report said.

The overall price index for EVs and PHEVs ended August at 115.5, lower than the overall price indexes for other vehicle types. 

Cox said the sample size was small, with only 0.2 per cent of used vehicle transactions in dealers and 0.5 per cent of listings are EV or PHEV.

“As we have seen in other regions, the resale value of used vehicles remains a concern due to a number of factors including buyer scepticism over battery health, government rebates and tax breaks pushing new vehicles only, and early adopter preference for the latest and greatest technology in a fast-iterating segment.”

Cox said that the top-selling used vehicles were the Ford Ranger (up 14.9 per cent MoM), Toyota HiLux (up 18.9 per cent MoM), Toyota Corolla (up 18.3 per cent MoM), Hyundai i30 (up 11.7 per cent MoM), and Toyota RAV4 (up 13.7 per cent MoM).“There are some different models in this list as you break down listings by age bracket,” it said.

“These include the MG HS (number four in the under-two year age bracket), Mitsubishi Triton (number two in the five to seven year bracket), and Holden Commodore (number one in the eight-plus year group).”

Cox’s Manheim Australia wholesale business reported that it recorded volume growth in August, up 15.6 per cent over July and 29.4 per cent YoY, for its best result since March 2021.

“The most-sold vehicles at our national auctions were the Ford Ranger (up 29 per cent MoM), Holden Colorado (up 54.5 per cent MoM), Mitsubishi Triton (up 15.6 per cent MoM), Toyota Camry (up 8.7 per cent MoM), and Hyundai i30 (up 23.1 per cent MoM),” Manheim said.

“While there was an uptick in pricing for the month for passenger vehicles (up 4.1 per cent) and SUVs (up 3.0 per cent), both were down over where they were six months ago, by 0.6 per cent and 5.1 per cent respectively.”

Manheim Australia said that the wholesale vehicle price movements since pre-COVID (December 2019) across all age brackets, passenger vehicles ended August at 165.4 index points (65.4 per cent more expensive on average over the December 2019 baseline), SUVs were 135.6, and LCV pickups were 137.3.

“The overall Price Index sat at 146.0, or 46 per cent higher than December 2019. This is down 9.2 per cent YoY and down 12.7 per cent from the May 2022 peak. 

“So, while wholesale used vehicle prices remain high, they’re coming down too.

“As we saw in the retail space, the price indexes for older wholesale used vehicles across sectors were greater on older stock than newer stock. 

“In the most extreme case passenger vehicles aged eight to 10 years ended August with a Price Index of 187.6, meaning they were nearly twice as expensive on average than in 2019.”

By Neil Dowling

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