‘It’s Bananas’: Navigating Buying and Selling in an Unseen Car Market

Second-hand cars are flipped for the highest prices ever seen in Australia as the global auto industry continues to recover from its biggest disruption yet.

With prices continuing to rise, used cars cost 65 percent more in the first three months of this year than in 2019 and 18 percent more than the end of 2021, according to data from Moody’s Analytics.

Some motorists manage to sell used cars for almost as much as they bought them years earlier, while others pay new car prices for worn-out vehicles.

Dan Baxter sold his ute for $1500 less than he bought it for eight years earlier. (Nine)
“We’ve never seen anything like it”, content director at Motive said James Ward.

“Even for regular cars you have ridiculous waiting lists, waiting times of 12 to 18 months.

“And seeing used cars actually going up in value is also something we’ve never seen before.

“In many cases, you can sell an 18-month-old car for what you paid for it.”

Ward said certain types of cars, such as the highly sought-after Suzuki Jimny, went for even more extraordinary prices.

He said the small four-wheel drives were listed for $30,000 pre-owned, but they were advertised in many places as being for sale for nearly $50,000.

Dan Baxter, of Ballarat in western Victoria, sold his ute on Facebook in February for just $1500 less than he’d bought it eight years earlier.

“I bought the 2008 Toyota Hilux in 2014 for $22,000 with 170,000 miles. I sold it in February 2022 for $20,500 with 225,000 miles,” he said.

Used cars are in high demand. (AFR)

The father thinks he could have made someone pay even more for his ute if he had put more effort into selling it.

“However, to lose just $1500 on a car in eight years is pretty good,” he said.

The unprecedented prices being paid in the used car market begs the questions: Should people sell their cars now? And what should they do if they have to buy?

We asked Ward for his expert advice on the situation.

Why do used cars go for such high prices?

Used cars are being sold at such high prices because there is a greater shortage of new cars worldwide than ever before.

Basically, the lack of cars came about because automakers stopped ordering so many auto parts when the COVID-19 pandemic hit, assuming sales would slow down.

However, the demand for cars increased precisely because people had more money to spend on cars, were unable to travel or spend on usual activities during the pandemic.

“So there was a huge demand for cars and a slowdown in production,” Ward said.

The rush of people having babies during the pandemic also led to more people needing a new car to get bigger.

Matthew, who lives near Caroline Springs, was left in exactly that situation.

“We needed a bigger car because we were having a baby,” he said.

“We bought a brand new Mazda CX-5 in November and had to wait until March to receive it.”

He is now trying to sell his used Toyota Yaris on Facebook and has informed more than 120 buyers in a week.

The global backlog in auto parts ordering was subsequently exacerbated by people working from home and ordering more computers and keyboards, leading electronics manufacturers to steal all available semiconductors, which are vital parts in cars.

Automakers then had to wait for more parts to be produced in order to place car orders.

The market is still trying to make up for the huge order backlog.

Are you now choosing to sell your car?

Ward has warned anyone thinking about selling his car to make sure he’s planned what he’s going to do when he’s gone.

“If you’re selling at a high market, you’re going to be buying at a high market,” he said.

He advised people in need of a replacement car to secure the price and timing of their next car before making a sale.

“It’s just like real estate. You run the risk of selling a house and having to buy it in a case where your net conversion isn’t great,” Ward said.

However, if drivers have a car they don’t need, he said now is the time to sell them.

“Because it’s never been a better market for sellers,” he said.

James Ward advises people to be very careful when buying a car at this point. (Nine)

Advice for people who are currently buying a car

Ward has advised anyone buying a car right now to beware of the financial dangers.

“You have to be a very, very cautious buyer, especially when you’re using financing right now,” he said.

He advised buyers to make deposits to get on waiting lists to get new cars, despite the expected long waits.

“What can happen is that if there are 10 people in front of you in line, six of those people can change their mind or decide they’re not going to do it and you suddenly find yourself in line very quickly,” Ward said.

He said buying a new car is unlikely to put drivers at risk of overpaying for the car, as opposed to the high risk currently associated with buying a used car.

“With used cars, we see these huge differences between what is the kind of value you would expect to pay and what people are asking for,” he said.

“Drivers have to be very careful not to pay more for a car than they should be, especially if interest rates are rising.

“Because if the market corrects, you’re going to be in a really bad shape.”

It is currently a seller’s market when it comes to buying cars. (The age)

Ward said that for people who couldn’t afford to wait for a new car, there were still used cars with decent prices for their value, but buyers should shop around, do their research, and be open to the exact color. or model they were looking for.

“Don’t pay too much,” he emphasized.

“If you want to buy a car that feels expensive for what it is, don’t do it.”

Ward also advises anyone who buys second-hand to look for cars that are still under warranty.

“If you buy a Kia three years old, when it was new, that car would have had a seven-year warranty.

“It means that it still has a four-year warranty.

“They’re the ones I’d look at because they’re the ones you’re most protected with, in case something goes wrong.”

He also advised anyone buying a used car to get a full service history and certified mechanical inspection before buying.

Ward said anyone considering buying a car can contact: contact@drive.com.au for some advice on what she was considering buying.

When are used car prices expected to fall?

Ward said auto experts hoped auto prices would return to normal within 12 to 18 months.

“But we said that about 12 months ago because we didn’t know the situation in Ukraine would happen,” he said.

The Russia-Ukraine military conflict disrupts the semiconductor market, causing further shortages of auto parts.

“We’re really hoping things will catch up within the next 12 to 18 months, but that’s assuming everything stays in its path,” Ward said.

He said rising interest rates would help correct the market a bit, reducing the number of people buying cars, especially the more expensive ones.

“Demand will decrease and people will look for cheaper cars,” he said.

“And we’re starting to go back to the system that we knew a few years ago.”

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Moody’s Analytics also predicts that used car prices will remain high in the “short term”.

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