Buying a car will likely be easier this year as demand and pandemic-driven pressures ease. After three years of unprecedented disruptions and supply chain issues, the domestic car market is expected to shift into a state of relative stability.
So is now the right time to buy a new or used car, or make the switch to an electric vehicle?
Signs used car prices are reducing
A supply shortage and long wait times for new cars sent the prices of used cars soaring during the pandemic. Some popular used car models were even selling for more than the suggested retail price of the new version.
Those sky-high prices are now falling as the rising cost of living puts pressure on household budgets and the supply of new cars slowly improves.
According to Moody’s Analytics Used Vehicle Price Index, used car prices fell for six consecutive months in the second half of 2022. It comes as a welcome relief to those priced out of a traditionally more affordable market over the past few years.
But things aren’t back to normal yet. The average price for a used car is still higher than it was before the pandemic.
New car prices still rising
Meanwhile, new car prices continue to climb. That trend is expected to continue through the first half of this year until manufacturers get ahead of demand. While the average wait time for a new car has eased slightly, it’s still significantly higher than before the pandemic. Some models, like the Toyota RAV4 Hybrid, still have a wait time of 12 months or longer.
But some buyers are clearly happy to wait. New car sales were up 3 per cent in 2022 with 1.08 million vehicles sold – the industry’s strongest year since 2018.
If you’re in a position to wait for your preferred new car, then you may want to consider locking in your order now before prices go up further.
EVs are gaining market share
Battery electric vehicles made up 3.1 per cent of new car sales last year, up from 2 per cent in 2021. Some experts are tipping an EV boom in 2023 as interest grows and many new models hit the market.
While Tesla makes up more than half of Australia’s EV sales, it’s facing more competition from not only the major car manufacturers but more affordable Chinese EVs like the BYD Dolphin and MG4.
Uptake is expected to grow as cheaper models hit the market and more charging infrastructure is rolled out.
EVs should become even more affordable when the Federal Government’s Fringe Benefit Tax exemption for salary-sacrificed electric cars comes into effect.
Looking to upgrade your vehicle or add to your company’s fleet this year? Get in touch with us to talk about your asset finance options.