USED-vehicle prices in Australia have jumped for the fifth consecutive month with September prices averaging almost 30 per cent higher than the same month last year.

A Datium Insights-Moody’s Analytics report shows used-vehicle prices in September were also up 3.8 per cent on August and that now is the best time on record to be selling a used car, SUV or ute.

The report shows that:

• Wholesale used-vehicle prices rose for the fifth consecutive month, rising by 3.8 per cent compared with August and are now a staggering 29.9 per cent higher than they were at the same point in 2019.
• Prices of trucks, SUVs and utes rose faster than passenger cars from August to September, rising 8.7 per cent compared to 2.1 per cent.
• Limited new-vehicle sales and thus reduced number of trade-ins have restricted supply of used vehicles available to the market.

Moody’s Analytics’ automotive economist Michael Brisson said price gains in September were lower than in previous months as the average was held back by weaker passenger-car sales that grew a modest 2.1 per cent from August.

However, the larger truck, ute and SUV segments were stronger in September with an 8.7 per cent increase over the previous month.

“The split in price movement between cars and trucks/SUVs is a divergence from what had previously been a tandem movement of the two market segments since the start of the recession,” he said.

“Preference for larger vehicles has been gaining rapidly over the past six years. During this period, sales of passenger cars have fallen to less than 30 per cent of total new-vehicle sales.

“These preferences have not changed because of the pandemic and recession. Conversely, current circumstances have likely accelerated the change; petrol prices have been consistently low since February and are down 20 per cent from a year earlier.”

He said that high demand and weak supply of used vehicles was caused by the slow-down in the new-car market.

“Most new-vehicle purchases come with the trade-in of another vehicle, a used car,” he said.

“However, new-vehicle sales have dropped more than 20 per cent from an already-underwhelming 2019 rate and have tumbled to the third lowest monthly rate on record in August, outdone by only April and May of this year.

“The limited sales and thus limited used-vehicle supply continue to support the price increases in the wholesale used-vehicle market.”

He said that this change in the used-vehicle market’s supply and demand ratio was seen more dramatically when looking at individual vehicles.

“Average transaction data in the Moody’s Analytics AutoCycle shows the average price of a Ford Ranger has risen despite the average kilometres on the vehicle staying consistent,” he said.

“The price rise begins in May and continues through the last observations in August. The only other period there was a significant rise in the average sales price was in April 2019, but this was caused by the mix of vehicles being skewed towards Rangers with fewer kilometres driven.”

Mr Brisson said Moody’s outlook was for used-vehicle price growth to slow and finally subside as markets readjust towards the end of the calendar year.

“At this point, the unprecedented and unexpected ride that used-vehicle prices have taken over the past five months will come to an end,” he said.

However, prices will remain high.

“Once dealers know what they can get for a vehicle they are not likely to drop prices back down without a major shift in market fundamentals,” he said.

“For this reason, the current level of pricing for used vehicles is expected to be the new normal.”

By Neil Dowling