In October, the Australian used-vehicle market maintained its ongoing trend of declining prices, a pattern that’s been consistent since May according to Catarina Noro, Associate Economist, Moody’s Analytics. This development is largely due to the global increase in automobile production, which has resulted in an influx of new vehicles in Australia and eased price pressures in the second-hand vehicle sector.
As reported by the Federation Chamber of Automotive Industries (FCAI), Australia saw an unprecedented number of new vehicle sales in 2023, with over a million deliveries recorded since the beginning of the year. In fact, five of the last six months have set new sales records, with October contributing 106,809 new vehicles alone.
The combination of stricter financial conditions and the increasing availability of new vehicles is likely to alleviate inflationary pressure in the used-vehicle market for the remainder of the year and into the next. The prediction is a 9.5% price drop in 2023, an additional 9.2% decline in 2024, with prices expected to stabilise by 2025.
However, our economic forecast isn’t without potential risks. Should the global economy underperform, the Australian economy could experience a more severe and rapid drop in demand than currently anticipated, leading to a faster price decline. Conversely, there’s a risk that the anticipated demand slowdown may not occur as quickly as projected, which could maintain high prices in the used-vehicle market for a longer period. Furthermore, if the expected increase in new vehicle production and imports doesn’t occur as planned, the decrease in used-vehicle prices may not be as significant as initially projected