New car supply disruptions saw used car prices rise earlier this year, but with these hurdles largely overcome pre-owned prices are back on their way down.
Financial intelligence firm Moody’s Analytics expects prices to continue their downward trajectory after declining for the last three months, citing improvements in new car supply and high interest rates that will likely reduce demand for used cars.
Used vehicle prices fell by 1.6 per cent from May to June, and are now 6.7 per cent lower than during the same period last year.
Prices for used cars were down 2.4 per cent, while utes and SUVs were down 0.9 per cent.
The latter have seen the biggest fall since last year, being down 12.6 per cent compared to 6.1 per cent for cars.
Overall, Moody’s Analytics expects used car prices to fall around four per cent in 2024, after declining by 9.3 per cent in 2023.
It had previously projected a drop of around nine per cent for 2024.
Prices are 18.6 per cent lower than their peak in May 2022, but still 44 per cent higher than the pre-pandemic level in June 2019.
The state of the economy and government monetary policy is having an impact on used car prices, with high borrowing costs eroding disposable income and undermining consumer confidence.
Moody’s Analytics doesn’t expect any further interest rate hikes, but doesn’t expect a reduction in the cash rate until later this year and therefore predicts household expenditure won’t increase insignificantly during 2024.
Changes in the new car market will have a ripple effect on the used market.
Moody’s Analytics notes car production in China was up 11.6 per cent in 2023, while Japanese production was up 18.2 per cent, with this higher volume of new cars putting further downward pressure on used car prices.
