Used-vehicle prices increased by more than a third in 2020 as frugal Australians, wary of Covid-19 risks on public transport, opted for more personal modes of transportation.

According to Moody’s Analytics Price Index, wholesale used vehicle prices grew by 35 per cent in 2020, with the price of popular light trucks, SUVs and utes rising by 46 per cent.

Some of the most popular second-hand models included the Ford Mondeo and Ranger, the Holden Commodore, Mitsubishi Outlander, Toyota Hilux and the Subaru Outback.

The unexpected spike in price has been attributed to multiple factors including supply shortages in the new vehicle market and reduced trade-ins. The leading factor was the “Pandemic-induced changes to tastes and preferences [that] caused people to shun public and shared transportation,” writes Michael Brisson, Senior Economist and Associate Director at Moody’s Analytics.

However, these unique factors are unlikely to continue in 2021, as demand softens, and the supply of new vehicles becomes replenished.

“Used-vehicle prices are expected to have peaked across Australia in the fourth quarter of 2020,” Mr Brisson writes, predicting a three per cent price decline in the first quarter of 2021 and a further one per cent in the second quarter.

“This will mark the first quarter-over-quarter drop in prices in the past two years outside of the lockdown-driven drop in the second quarter of 2020.”

The Australian market has never experienced a comparable rise in used-vehicle prices. With a lack of precedent, the winding down of prices is met with considerable uncertainty: slow and steady, or steep and sudden.

Source: The Australian | COVID drives used car demand to rev up prices 30pc in 2020

20 January 2021