Used car prices continue to soar – just more slowly

Analysis of used car listings on carsales has revealed the average prices of pre-owned vehicles is continuing to rise, albeit at a slower rate than we’ve seen over the past three years.

According to our analysts, used vehicle prices – under $200,000 – increased by an average of 6.7 per cent in February 2023 compared to the same month last year, while prices of used cars from mainstream brands increased even more, by 8.1 per cent year-on-year.

Both these figures are considerably lower than the peak growth rate of 29.8 per cent (year-on-year) recorded in June 2022, but it seems things are back on the up given the price growth rate of 9.4 per cent as of March 6, 2023.

Used car prices among prestige brands are tracking far more modestly compared to volume brands but continue to see positive growth – up 2.8 per cent in February compared to the corresponding month in 2022.

This point is hammered home by the very slim 0.7 per cent price growth recorded for used Mercedes-Benz vehicles last month, although list prices for used BMWs increased by a more substantial 5.3 per cent in February.

These price growth rates are in stark contrast with the 8.4, 12.7 and 10.9 per cent average list price increases for used Ford, Kia and Toyota vehicles respectively, with prices for the ever-popular Toyota RAV4 rising the most thanks to record waiting times for new examples, at an average of 17.7 per cent last month.

While sellers of used cars will be buoyed by the news, it doesn’t bode so well for buyers on a budget or those looking to side-step the prolonged delivery times for almost all new vehicles at the moment.

Gauging the skyrocketing prices of in-demand vehicles on the used market became a commonplace practice during and since the pandemic as the availability of many models tightened.

The most prominent examples in recent times include the Toyota LandCruiser (200, 300 and 70 Series), Ford Ranger and Hyundai i20 N, used prices for which have been inflated by as much as 60 per cent over their new list prices.

But there are a few glimmers of hope for consumers, not least because the gradually slowing upward trend will eventually peter out and come back down to Earth, but because there are already models out there with decreasing average prices.

For example, our analysts drew attention to the Mazda CX-5 (currently Australia’s best-selling medium SUV due to the lack of RAV4 stock), used prices for which are starting to trend downwards compared to their peak several months ago.

On average last month, list prices for used CX-5s were only 0.5 per cent higher than they were in February 2022, almost bucking the wider market’s upward trend.

More solace can also be taken from the most recent data released by Moody’s Analytics, which suggests that average used vehicle transaction prices continue to fall from their height in May 2022.

“Although prices have come down 12.5 per cent since their all-time peak in May 2022, they are still significantly high when comparing with the pre-pandemic period,” said Moody’s Analytics associate economist Catarina Noro.

“Our index in February is 59 per cent higher than during the same month in 2019, one year before the pandemic.

“Nevertheless, we are expecting that used-vehicle prices will continue to come down during the next months, on the back of better supply-side conditions and as global growth slows down in 2023.”

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