If you’re like every fleet professional I know, you’re super interested in the outlook for used vehicle prices and what that means for the future values of your fleet. Wouldn’t having a crystal ball make forecasting residual values much easier?
Well, Katrina Ell, Sydney-based senior economist at Moody’s Analytics, will kick off the 2023 fleet conference organised by the Institute of Public Works Engineers Australasia (IPWEA), talking about the key economic indicators that will influence used car, truck and plant asset values.
Ell said her keynote talk will set out expectations for the global economy over the next 12 months and then drill down to what that means for the Australian economy, and then look at what that means for used vehicle prices.
“We’re in unprecedented times with COVID, high oil prices, central banks moving aggressively,” said Ell, adding, “Australia is facing significant challenges as well with the RBA also moving aggressively, inflation being high and households are under significant pressure.”
In a pre-conference interview Ell said she expects used vehicle prices to decline through this year and next after peaking in May 2022.
Moody’s Analytics, in association with Datium insights and Pickles Auctions, produce a used vehicle price index. The last measure of the index, updated February 6, was down 11.6 percent from the May 2022 peak. But that is still more than 53 percent higher than pre-pandemic levels.
“Through the pandemic used vehicle prices rose to unprecedented levels because of supply chain disruptions,” said Ell.
The surge in used car prices through 2020, 2021 and into May 2022 came as supply chain constraints disrupted new vehicle imports causing fleets to hold onto vehicles for longer.
Prices were also driven higher on increased consumer demand as people added second and third cars to their family to avoid public transport amid COVID and associated lockdowns.
Now, times have changed. The supply chain disruptions are easing and new vehicles are arriving, and at the same time Covid lockdowns have ended and rising interest rates and inflation are causing traditional buyers of used vehicles to cut back spending and defer buying large capital items.
“Households are not going to want to be making those big ticket discretionary purchases anymore,” said Ell, adding “Instead, they’re going to be pulling back on that because they’re dealing with high inflation and higher mortgage repayments. So we should see used vehicle prices continue to come down a bit this year and also next year as well.”
Ell said she will take the opportunity of meeting with fleet professionals at the IPWEA conference next month in Brisbane to getting a deeper understanding of how the index can be helpful to them.
“It will be good to know what they’d like to see more of in terms of the analysis that we produce,” said Ell.
And that’s just what the conference is all about: people sharing ideas with the objective of helping everyone do better.
The IPWEA Fleet 2023 conference is scheduled to start Monday March 23 and end Wednesday March 25 with a technical tour, a visit to Northside Kia in Brisbane to see how they are adapting to accommodate electric vehicles. The conference and associated exhibition is being held at Brisbane’s Royal International Convention Centre.
