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Used-car prices plummet amid cost-of-living crunch

Australians are enjoying lower prices for used cars as a growing number of families turn to the second-hand market amid cost-of-living pressures.

Figures published by AutoGrab and the Australian Automotive Dealer Association (AADA) show more than two million used cars were sold nationwide in 2023, up a huge 34.4 per cent.

Prices also fell from peaks seen last March when used cars retained 75.8 per cent of their original value, reaching a low of 67 per cent (an 11.6 per cent decline) by the end of 2023.

The shift is a big turnaround from the pandemic years when used-car prices soared amid a series of global supply chain bottlenecks that limited the number of new vehicles available.

Those bottlenecks have now been resolved, and the influx of new vehicles has had a marked effect on the second-hand market, particularly as population growth picked up post-COVID-19.

AutoGrab chief operations officer Henry Pedersen said it’s been a “turbulent” year for used-car sales, with prices falling despite an increase in demand.

“There was a really long period there since mid-2020 where there was a shortage of new cars,” Pedersen said.

“That’s coming out of the market, which has immediately dropped prices. That’s a solid driver, but also a cost-of-living crisis with people needing to exit their new cars.”

Australia’s two largest states, New South Wales and Victoria, led the way, with price drops of 13.2 per cent in 2023 for vehicles between two and four years old, according to the analysis.

Toyota was the top used-car brand with a 16.6 per cent market share, followed by Mazda at 8.2 per cent and Ford at 8 per cent.

The Ford Ranger, however, was the top-selling vehicle at 65,938 units, beating Toyota’s HiLux at 65,852 units.

About 60 per cent of used cars sold in 2023 were done privately, while 40 per cent were dealers.

The report also found that the number of second-hand sales for electric and hybrid vehicles is on the rise, nearly doubling last year from a low base, representing about 0.7 per cent of sales.

Prices for used EVs under two years old fell 15.6 per cent in 2023, while those aged between two and four years old saw prices plunge 23.4 per cent. Average time to sell was about 75 days.

Pedersen predicted that the market for used EVs will see a “really strong increase” in the next year as a growing number of new vehicles filter through into the second-hand market over time.

The cost-of-living crisis may also push some people towards trying to sell their EVs, he said.

“People who bought an EV or any expensive car in the last few years may all of a sudden need to get out,” he said.

“We’ll see the same trend [we saw last year]if not even faster.”