Used car prices continue to soar as demand rockets due to slow new-car deliveries

A rise in demand for new cars during the COVID-19 pandemic coupled with global manufacturing shortages has led buyers towards second-hand vehicles leading to an unprecedented rise in prices. Experts warn this may continue for a few more months until production units catch up with demand.

A used car dealership in Melbourne. Source: Supplied by Mr Sangha.

Highlights

• With a delay in the availability of new cars, used car prices have risen by 30 to 35%
• 'Price of commercial vehicles like vans and utes has risen more than others, says dealer principal
• Industry insiders claim there will be a slowdown in used car prices only by the end of 2022

Jagraj Sangha, dealer principal of Jags Melbourne Motor group, said the demand for pre-owned cars has gone "crazy."

"As the restrictions ease up, we are already flooded with calls and appointments. I have been in the business for ten years and have never seen such a price surge in used vehicles," he said.

The used car market has experienced unprecedented changes globally since the outbreak of the pandemic.

Mr Sangha, who joined his family business even before he could drive, said that car manufacturers are struggling to get the semiconductors (the microchips used in cars), causing production delays of new vehicles and inflating the price of second-hand cars.

"Rather than catching public transportation in the pandemic, every individual in a household increasingly opted for a private vehicle. So, prices inflated by at least 30-35% on the back of high demand and supply shortage," he said.

Jagraj Sangha, Melbourne based Dealer Principal. Source: Supplied by Mr. Sangha

Mr Sangha said that trade vehicles and SUVs have also seen significant growth.

"For example, 5-year-old Hilux is getting sold at the same price or above as it was bought."

He said prices might begin to stabilise by the end of next year. But, until then, elevated prices for used vehicles may be the "new normal."

He added that every brand in the market is affected, influenced by their respective models, including Toyota and Japanese-manufactured cars, which are all-time community favourites.

How to beat the price rise?

"The more research you can do to check over a potential purchase, the better chances to find bargains," Mr Sangha advised.

"Independent inspection can be organised to know the mechanical side of the car, check for Personal Property Securities Register (PPSR) certificate clearance and Redbook for the valuation based on the current market.

"Or consider waiting until 2022 if you can," he said.

 

Click on the player above to listen to the interview with Jagraj Sangha in Punjabi.

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