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Used car listings are drying up as demand soars

Listings for used cars in Australia have recorded a marked year-on-year decline, while prices are heading in the opposite direction, breaking records thanks to a fall in supply across the board.


According to recent data from JP Morgan, overall listings at Carsales for the second half of 2020 were down 20.5 per cent year-on-year, with private listings in particular dropping 45.7 per cent in the second half of 2020 compared to the same period in 2019.

Similarly, dealer listings decreased by 7.3 per cent compared with 2019 and new and demo listings also declined by almost 25 per cent.

Why? Because we’re currently in the midst of a global car shortage – both of the new and used variety.

 

Declining turnover

“New vehicles supplies have remained low because of production and supply chain slowdowns that have occurred worldwide due to the pandemic,” explains Michael Brisson, Senior Economist at Moody’s Analytics data firm.

“Additionally, used vehicle supplies have been constrained due to leases that were extended and less kilometres driven by fleet companies leading to declined need for turnover in fleet sales.

“Not to mention, a lack of trade-ins that have occurred because of lower new vehicle sales.”

Brendon Green, General Manager of Motor Vehicles at Pickles, says the automotive auctions company has witnessed a notable fall in listings in 2020 which has been almost single handedly driven by the fleet management and finance repossession segments.

“Less than 10 per cent of our inventory comes from private sellers, the majority comes out of government fleers and financiers and turnover in both those segments has been down due to social distancing and a lack of new vehicles.”

 

Sale prices soar

Mr Green says stock remains up to 35 per cent down on 2020 levels but, as a result, sale prices are up almost 30 per cent on pre-COVID levels.

“If I was trying to sell my car privately I would absolutely be trying to do it as quickly as I could,” he suggests.

“I suspect early parts of 2021 will be strong, but then we will see a softening in mid-2021 from the dizzying heights we’re at at the moment.”

 

To be precise, “dizzying heights” means used-car prices that are 32 per cent higher than they were in 2019 and climbing, according to Moody’s Analytics data.

“People looking to sell their cars now will be pleasantly surprised compared to if they had looked to sell in December of 2019,” Mr Brisson of Moody’s Analytics says.

“There is a significant premium compared to pre-recession prices that has made its way to the consumer market.”

 

Less traditional listings surge

While traditional used-car sales avenues are witnessing a decline in listings, less traditional outlets like Gumtree have witnessed a rise – possibly driven by people looking to offload cars quickly or avoid human contact altogether.

For 12 weeks straight, JP Morgan has recorded a rise in the number of automotive listings on Gumtree.

In fact, recent data showed total automotive listings on Gumtree were equivalent to almost 70 per cent of Carsales’ overall listings, while private listings on Gumtree were 215 per cent of Carsales’ private listings.

Mr Green from Pickles says he has also seen a surge in the uptake for the company’s DIY Inspect app, which allows private sellers to have their car valued and collected via an entirely contactless process.

“We’ve had over 20,000 downloads on the app since it launched 18 months ago and from May-June 2020 onwards we saw an escalation in this uptake – and we convert roughly 50 per cent of the offers we make,” Mr Green explains.

 

Utes and holiday SUVs in hot demand

Regardless of how you’re selling them, it’s the utes that are showing the greatest growth.

“Light commercial vehicles are in high demand right now and there’s been a shortage of them in that new car space – a lot of tradies are still tapping into the instant asset write-off space which has been really popular,” Mr Green explains.

Meanwhile, CJ Jayasinghe, CEO of Perth-based used car wholesaler Westside Auto, says aspiring holiday-makers are also pushing up prices on family SUVs.

“As COVID hit we saw companies not turn over their vehicles as frequently due to the uncertainty that existed, which dried up a lot of that stock from March to around September,” Mr Jayasinghe says.

“[But also during this period,] the appetite for upgrading personal cars to more rugged adventurous vehicles like Toyota LandCruisers started to occur because Australians wanted to explore their own backyard more.

“This meant our stock was predominantly higher spec’d vehicles and resulted in our average sale price being in the mid $30,000s [it’s typically around mid to high-$20,000s].

“The market is starting to normalise now and we have 2112 vehicles in stock as of today, which is getting close to pre-COVID-19 levels.”

Susannah Guthrie

Susannah Guthrie has been a journalist for over a decade, covering everything from world news to fashion, entertainment, health and now cars. Having previously worked across titles like The New Daily, Elle, Harper's Bazaar, People Magazine and Cosmopolitan, Susannah now relishes testing family cars with the help of her husband and two-year-old son.

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