Used car prices to stabilise

RELIEF could be on the way for consumers after sky-high used car prices dropped for the first time in more than a year in August and September, according to Moody’s Analytics.

But the price decline “is more cause for alarm than celebration”, according to Moody’s economist Michael Brisson, as it represents the impact of a consumer activity “tailspin” caused by lockdowns in NSW and Victoria. Moody’s has tracked an almost 5 per cent decline in prices from peak levels in July, the first decline since April of 2020. Manufacturing and shipping disruptions and microchip shortages throughout the pandemic have reduced the supply of new vehicle stocks.

International border closures and public transport health concerns have sent car sales skyrocketing, limiting the number of used cars while pushing up prices.

Mr Brisson said used cars had jumped 35 per cent in price since the pandemic started, while utes had jumped 39 per cent. “Since the dramatic drop in prices in March and April 2020, the rapid movement has been upward,” he said.

Mr Brisson said the recent lockdowns had reduced consumer demand for cars, leading to a decline in prices.

“Used-vehicle prices are expected to move sideways until midway through 2022 when the new-vehicle market’s supply-chain issues have been worked out,” he said.