A surge in demand for used cars has forced leading dealers to hold back on wholesale and abandon price negotiations.

In addition to low new car sales, this situation is believed to also be caused by the Covid-19 pandemic, as commuters seek a less-expensive form of personal travel to avoid using public transport. Another possible reason offered is that those suitable for domestic travel by car are being sold to holiday-goers, unable to travel internationally.

The flagging new car sales have stalled the trade-in movement of cars, causing dealers around Australia to hold onto cars they would normally sell wholesale. As a result, dealers have found it difficult to obtain stock, finding the only vehicles available wholesale are those that dealers categorise as not viable to bring to a saleable condition.

Financial intelligence company, Moody’s Analytics, has reported that the prices of used vehicles has risen to an all-time high across Australia.

“We have stopped discounting so there are no negotiations. How it used to be has all changed,” reported one dealer, “We are keeping cars that we would normally wholesale.”

According to Moody’s Analytics Price Index, costs for used vehicles have increased 30.8 percent since April and are 16.2 percent higher than pre-pandemic prices in January.

The company reported that buyers looking to spend $10,000 on a Ford Ranger model in Summer 2020, paid an extra $1,600 for the same vehicle in Winter several months later.

While used cars are moving quickly for those who can locate stock, the balance in the market is beginning to normalise as the new-vehicle sales are beginning to pick up again.

Source: GoAutoNews Premium | Used-car demand soars

17 November 2020