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Used car stocks dwindle as prices and demand increase

Used car listings in Australia have recorded a year-on-year decline while prices are increasing, records being broken due to a decrease in supply.

According to data from JP Morgan, car listings at Carsales were down 20.5% in the second half of 2020. Private listings dropped 45.7% in the second half of 2020 compared to the same period in 2019.

Similarly, dealer listings decreased by 7.3% compared with 2019. New and demonstrator listings also declined by almost 25%.

The reason for this is the global car shortage of both new and used cars.

Declining Turnover

Michael Brisson, Senior Economist at Moody’s Analytics data firm says that, “new vehicle supplies have remained low because of production and supply chain slowdowns that have occurred worldwide due to the pandemic.”

Mr Brisson says that used vehicle stocks have been constrained because of lease extensions and that a decrease in kilometres driven by fleet companies have led to a lack of need for turnover in fleet sales. In conjunction with this, a lack of trade ins has been inversely tied to the decrease in new vehicle sales.

General Manager of Motor Vehicles at Pickles, Brendon Green, says that the automotive auctions company has witnessed a significant decline in listings in 2020 which was almost entirely driven by the fleet management and finance repossession segments.

“Less than 10 per cent of our inventory comes from private sellers, the majority comes out of government fleets and financiers and turnover in both those segments has been down due to social distancing and a lack of new vehicles,” Mr Green said.

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Sale prices skyrocket

Mr Green says that stock remains about 35% down on 2020 levels, however as a result, sale prices have gone up 30% compared to pre-COVID levels.

Mr Green says that if an individual were to sell their car privately, it would be best to do it as quickly as possible. “I suspect early parts of 2021 will be strong, but then we will see a softening in mid-2021 from the dizzying heights we’re at at the moment.”

Mr Green’s ‘dizzying heights’ refers to the used car prices being 32% higher compared to 2019 and are still climbing, according to Moody’s Analytics data.

“People looking to sell their cars now will be pleasantly surprised compared to if they had looked to sell in December of 2019,” Mr Brisson of Moody’s Analytics says.

Untraditional listings soar

While traditional used-car sales outlets are experiencing a decline in listings, untraditional outlets like Gumtree are experiencing a rise, potentially driven by people looking to unburden cars quickly or even avoid human contact.

JP Morgan recorded a rise in automotive listings on Gumtree for 12 weeks straight.

Recent data revealed that the total automotive listings on Gumtree were equivalent to almost 70% of Carsales’ overall listings. Private listings on Gumtree corresponded to 215% of Carsales’ private listings.

Mr Green says that he has seen an increase in the usage of Pickles’ DIY Inspect App which allows private sellers to have their vehicles valued and collected via a contactless process.

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Utes and SUVs in demand

Regardless of the avenue in which you sell your vehicle, utes are the ones showing the greatest increase.

Mr Green says that there’s been a shortage of light commercial vehicles and demand for them has been high, as many tradespeople are taking advantage of the instant asset write-off scheme.

CJ Jayasinghe, CEO of Westside Auto, a Perth-based car wholesaler, says that holidayers are also pushing up prices on family SUVs.

“As COVID hit we saw companies not turn over their vehicles as frequently due to the uncertainty that existed, which dried up a lot of that stock from March to around September,” Mr Jayasinghe said.

“[But also during this period,] the appetite for upgrading personal cars to more rugged adventurous vehicles like Toyota LandCruisers started to occur because Australians wanted to explore their own backyard more.

“This meant our stock was predominantly higher spec’d vehicles and resulted in our average sale price being in the mid $30,000s [it’s typically around mid to high-$20,000s].

“The market is starting to normalise now, and we have 2112 vehicles in stock as of today, which is getting close to pre-COVID-19 levels.”

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