Hard to drive a bargain on cars

Used car prices have begun to climb again in another blow to Australians struggling with cost-of-living pressures.

A Moody’s Analytics report reveals used vehicle prices have risen for the third month in a row, reversing a downward trend last year.

Used car prices soared 47 per cent after the pandemic, due to a shortage of computer chips that affected new-car supply.

Many buyers paid over the odds for low-kilometre, latemodel used cars, driving prices up. In some cases, popular used models were fetching more than they cost new.

New car supply improved towards the end of 2022 and throughout 2023, but took another hit in the first three months of this year.

The Moody’s Analytics report states March was the highest month-to-month growth in used vehicle prices since May 2022.

But it said freight issues in Europe should stabilise in coming months, relieving pressure on new car prices. It also says supply of cars is on the rise, as car makers recover from the chip shortage.

The report states increased vehicle production from Japan and China would help alleviate the situation and it predicts prices will fall in the remainder of the year.

“Despite the current uptrend, Moody’s Analytics projects a continued decline in the used-vehicle market in Australia because of the expected normalisation in supply and the negative impacts of high interest rates,” it states.

“The decline in average market price is expected to be less steep than last year, falling an additional 8.7 per cent after having declined 9.8 per cent in 2023.”

Moody’s Analytics reveals prices are 14.8 per cent lower than their May 2022 peak, but remain 47 per cent higher than the pre-pandemic level in February 2019.