While the spillover effects of conflict abroad have helped push up used car prices, April was the first month this year that growth showed signs of slowing.
The recent price increase contrasts with a downward trend in the second half of 2022 and 2023, during which auto production was recovering from a semiconductor chip shortage.
Moody’s Analytics said the April figures – in which the Used Vehicle Price Index rose just 0.15% – were in line with its expectations.
This modest growth comes after used car prices rose 1.8% from February to March. The April index was 4.9% lower than a year ago.
The used car segment grew 1.1% from March to April, while used utes and SUVs fell 0.15%.
The slowdown in used car price growth overall is due to the first decline in used car prices for utes and SUVs in 2024, although the pace of decline is expected to slow. slower than 2023.
Moody’s Analytics forecasts that the used car market will continue to decline due to improved supply and the negative impact of high interest rates.
The financial intelligence firm attributed part of the expected decline to growth in global vehicle supply, with improved new vehicle supply in Australia putting downward pressure on used car prices. use.
The downward pressure on prices, driven by persistent inflation and high borrowing costs, is expected to continue to dampen spending and have an impact on flows in the used car market.
Moody’s Analytics deputy economist Catarina Nero said the forecast was “vulnerable to upward price pressure.”
Any supply chain disruptions, or lingering issues stemming from the Red Sea situation, could force automakers to increase prices to cope with escalating shipping costs, she said. ”.
“Such adjustments will not only impact the new vehicle market but could also impact the used vehicle market.”
While prices may be falling and are 14.3% below their May 2022 peak, they are still 47% above their April 2019 pre-pandemic level.
