Used car prices are continuing to fall in Australia, but it’s not a rapid race to the bottom.
Financial intelligence firm Moody’s Analytics says its Used-Vehicle Price Index in September was down 6.2 per cent on the same month last year, and down 1.0 per cent from the previous month.
Breaking the numbers down, however, and it says ute and SUV prices are falling at a faster rate.
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Comparing September 2023 and September 2024, passenger car prices were down 3.7 per cent, but utes and SUVs were down 10.7 per cent.
Moody’s Analytics expects prices to continue to decline gradually over the year, and at a slower rate than in 2023. In 2023, Moody’s Analytics reported a 9.3 per cent drop in used vehicle prices. It’s predicting a 5.7 per cent drop this year.
It expects there will be occasional, modest increases in its Used-Vehicle Price Index from one month to the next, while next year it expects prices to be 4.4 per cent lower than this year.
An improvement in supply of new vehicles is expected to continue to take pressure off of the used car market, while high interest rates will potentially dampen consumer demand.
Should high interest rates stick around for even longer, they could further diminish demand for car loans.
The flipside to this is if efforts to reduce taxes and the cost of living work, they may boost demand for vehicles and in turn put upward pressure on new car prices, with a flow-on effect on used car prices.
While prices are continuing to drop, in September reaching a point 20.7 per cent lower than their May 2022 peak, that’s still quite a bit higher than the days before COVID.
Overall, Moody’s Analytics says used vehicle prices were still 38 per cent higher than the pre-pandemic level in September 2019.
