Is it time to sell when used car prices are through the roof?
With Australia facing a severe car shortage and fuel prices skyrocketing, you might be eyeing this car in the driveway and wondering if it’s worth it.
Used cars in Australia are at peak prices, with data from Moody Analytics showing that used cars will sell for 65% more in 2022 than before the COVID-19 pandemic: 18% of that happened in the last three months.
If you’ve been seduced by the work-from-home lifestyle, you may not be getting as many miles on your motor as you used to. With cars not declining in value as dramatically as they used to, it might be time to consider whether your car might be worth more in the market than it is in your garage.
How much will my car cost me?
A report by the Australian Automobile Association puts the national average annual transport cost in capital cities at $20,855 (and $17,195 in regional Australia). This average is based on a two-car home for two people in their 30s not using public transportation. These amounts are both more than $2,000 higher than the 2019 costs.
In the last month alone, we’ve seen auto loan interest rates begin to rise, increasing repayment costs and fuel costs. We can say with certainty that car ownership costs have increased, even if the WFH lifestyle is more dominant.
With alternatives to car ownership on the rise – widespread public transport (estimated by the Australian Government to be 30 times cheaper than owning a car), car sharing and ridesharing – as well as more people choosing eco-friendly cars, you might have been tempted to to change something.
Should I sell my car?
If you’re thinking of swapping your car for an eco-friendly alternative, or commuting all day on public transport, this could be the perfect time.
Traditionally, cars lose value as soon as they are bought. The more kilometers you have on your speedometer, the lower the resale price. Since you can’t add value to a car, the prospect of selling your car never seemed particularly enticing! It’s a little different at the moment.
Given the limited supply of new cars on the market, recent conditions have resulted in some used cars being sold at near new car prices.
Lloyds Auctions has recently seen cars with relatively low mileage – take a Toyota Landcruiser GXL Ute with 34,000 km on the odometer which, due to high demand, sold for about $8,000 above the MSRP of $82,000.
Electric vehicles are also in high demand — mirroring the rest of the market — with Teslas selling at Lloyds-owned truck yards for $5,000 above usual retail.
If your vehicle is a coveted model and no longer just classic and luxury models, you could be sitting on a gold mine. The Suzuki Jimny, a popular lightweight 4×4, is valued at around $30,000 but can be seen in used car listings for $50,000.
What if I want to buy a car?
If you want to benefit from the high prices on the used market, you should consider a few things.
It’s not that easy to sell your car for a great price and get hold of something easy. If you want to buy again, buy in the same market where you sold and the market will be in one state. New cars are hard to find, followed by long waiting lists and inflated used car prices.
Although we are big fans of public transport and love to use ridesharing, sometimes you just need your own car. This is particularly the case in areas that are less accessible by public transport. If you’re looking to buy a used car, you may need a larger sum than you previously thought due to high prices and rising interest rates.
Looking for something new to rev up your engine? Take a look at some of our best car loans and our guide to buying a used car.