Used car prices increased slightly in May, but are still significantly lower than 12 months ago and are expected to continue falling.
A report from financial intelligence firm Moody’s Analytics shows used car prices rose 2.17% from April to May, or 2.6% for utes and SUVs and 1.5% for cars. with car.
This is the second consecutive quarter in which seasonally adjusted used car prices have increased.
This corresponds to a New car delivery record monthalthough the Federal Automobile Industry Chamber notes that a significant portion of the vehicles delivered in May were ordered back in 2022.
Used car prices are still 9.3% below their peak in May 2022: cars down 5.6%, utes and SUVs down 17%.
According to a report by Moody’s Analytics, prices are expected to fall another 12% this year and 7.6% in 2024 before stabilizing in 2025.
It warns that while demand for new and used cars is high, unemployment is low and Australians are resilient to rate hikes, clouds are still forming.
Specifically, the unemployment rate is slowly rising and early signs are emerging of a slowdown from rate hikes. The company also expects the Reserve Bank of Australia to keep rates steady this year and that by early 2024, rate cuts will be needed to support the economy.
“If global economic uncertainty causes the Australian economy to perform worse than expected, then a sharp drop in demand will push prices lower and faster than expected,” said Moody’s Analytics economist Catarina Noro. know.
“On the other hand, there is an increased risk that demand may not cool down as quickly as expected, driving used car prices higher over the longer term.
“The rate of price decline has slowed significantly and the supply of new cars remains limited. Additionally, rising new car prices are making used vehicles more attractive than they were a year earlier.
“If new vehicle production and imports do not continue to improve, the expected drop in used car prices could be shorter and shallower than expected.”
The ever-improving supply of new vehicles is expected to ease some of the pressure on the used car market.
Auto production in Japan is up 22.8% since last year (if still 21% below 2019 levels), while China’s auto production is up 15.3% in March compared to last year. last year.
