Ruqayyah Snyder
Australia has always been a hub of excitement for car enthusiasts and road trippers alike, with its vast landscapes and winding coastal routes. As the country returns to normalcy, the used car market is poised to change. Used car prices in Australia are falling, but the decline isn't expected to be as steep as in previous years. New car supply disruptions caused used car prices to rise earlier in 2024, but with these issues largely resolved, used car prices are now dropping.
| Characteristics | Values |
|---|---|
| Location | Australia |
| Used car prices | Falling |
| Factors influencing the automotive market | Economic conditions, consumer preferences, industry trends, economic recovery efforts, and shifts in global supply chains |
| Factors influencing used car prices | Car production in China, Japanese car production, new car supply disruptions, interest rates, and tariffs |
| Average price of a used car in July 2025 | $25,512 |
| Used car prices in May 2024 | 1.6% lower than in April 2024 |
| Used car prices in June 2024 | 6.7% lower than in June 2023 |
| Used car prices for utes and SUVs in June 2024 | 0.9% lower than in June 2023 |
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What You'll Learn
Used car prices fell in 2024
After a period of disruption in the automotive industry, used car prices in Australia fell in 2024. This came as welcome news to car buyers, who had been eagerly awaiting a shift in the market. The price drop was influenced by a combination of factors, including economic recovery efforts and improvements in the supply of new cars.
Market Dynamics and Consumer Behaviour
The automotive market in Australia is dynamic and ever-evolving, influenced by various factors such as economic conditions, consumer preferences, and industry trends. In 2023, the Australian automotive sector experienced changes in new and used car prices, leaving buyers and sellers alike anticipating adjustments in the market.
Supply Chain Improvements
Earlier in 2024, new car supply disruptions caused a temporary rise in used car prices. However, as these hurdles were overcome, used car prices began their downward trend once again. This was further supported by increased car production in China and Japan, adding to the downward pressure on used car prices.
Data Analysis
Analyses of private car prices on platforms like Carsales revealed that prices were dropping for certain models, even for popular vehicles like the Prado. However, dealer prices seemed to be slower to adjust, with some dealers still sticking to higher prices and refusing to negotiate. Nonetheless, the market shift was undeniable, and buyers were advised to explore negotiation opportunities.
Industry Insights
Industry experts, such as automotive journalist William Stopford, provided insights into the falling used car prices. Stopford highlighted the competitive pricing and features offered by Chinese rivals, which contributed to the downward pressure on used car prices. Additionally, the entry of new players, like the Jaecoo J7 SHS plug-in hybrid SUV, provided better value for money, further influencing the market.
In summary, used car prices in Australia fell in 2024, providing a more favourable environment for car buyers. This price drop was influenced by a combination of factors, including improvements in new car supply, economic recovery efforts, and increased competition in the market. As the industry continued to evolve, buyers and sellers remained vigilant in navigating the dynamic landscape of used car prices in Australia.
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Supply chain issues and high interest rates impact prices
The Australian automotive sector is witnessing dynamic changes in new and used car prices. Several factors, including supply chain issues and interest rates, are influencing the market trends and prices.
Supply Chain Issues
The automotive industry is facing supply chain disruptions due to various factors, such as parts or energy shortages, factory shutdowns, and shipping delays. These issues have resulted in a decline in the availability of new cars, which has a direct impact on the used car market. When there is a shortage of new cars, the demand and prices for used cars tend to increase.
The semiconductor shortage that began in 2020 is a significant example of how supply chain issues affect the market. This shortage led to production delays and reduced the supply of new cars, causing used car prices to rise by 9% to 12% in 2021. Additionally, geopolitical conflicts, such as the 2022 Russia-EU gas dispute, have contributed to rising energy prices and production costs for car manufacturers. As a result, manufacturers have scaled back production and are rethinking their operations, further impacting the supply of new cars and, consequently, the prices of used cars.
High-Interest Rates
Interest rates play a crucial role in the used car market by influencing buyer demand and vehicle prices. When interest rates rise, borrowing money becomes more expensive, affecting the affordability of car loans. This leads to reduced buyer demand and can result in price drops in the used car market. Conversely, when interest rates are low, borrowing becomes cheaper, encouraging more people to take out loans, which increases demand and puts upward pressure on used car prices.
During high inflation, interest rates typically rise to curb spending, which can slow down the used car market. On the other hand, low-interest rates during economic downturns, such as the COVID-19 pandemic, can stimulate borrowing and increase used car sales.
In summary, supply chain issues and high-interest rates are key factors influencing the Australian used car market. These factors affect the supply of new cars, borrowing costs, and buyer demand, ultimately impacting the prices of used cars.
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Tariff worries and seasonality affect demand
Tariff uncertainty and seasonality have a significant impact on the demand for used cars in Australia.
Seasonality plays a crucial role in the Australian used car market, with prices typically rising until Easter, softening during the winter months, and then climbing again as the warmer spring weather returns. This seasonal trend was evident in 2024, when wholesale used-vehicle prices rose slightly in January, indicating a potential return to the long-term seasonality pattern.
However, tariff worries have added complexity to the market. High borrowing costs, inflation, and subdued demand have contributed to a decline in used-vehicle prices. According to Moody's Analytics, used-vehicle prices in Australia fell by 9.3% in 2023 and were projected to fall further by 8.1% in 2024. This downward trend is influenced by increasing supply and eroding purchasing power, leading to softened discretionary demand.
Additionally, consumer preferences have shifted towards lighter, more fuel-efficient used cars, causing heavier vehicles like SUVs and utes to lose value more rapidly in the used market. This shift in preferences has resulted from dwindling consumer confidence and reduced disposable incomes.
The combination of seasonality and tariff uncertainty makes forecasting used car prices a challenging task. While summer is typically the buying season, tariff concerns may dampen demand. As such, used car prices are expected to continue their slow but steady decline in the wholesale markets, with the potential for further drops in retail prices.
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Dealers are slow to adjust prices
Australia's automotive industry has always been vibrant, with Australians sharing a deep love for cars. The automotive market is influenced by several factors, including economic conditions, consumer preferences, and industry trends. In recent years, the Australian automotive sector has witnessed fluctuations in new and used car prices, leaving buyers and sellers curious about the market's trajectory.
While used car prices in Australia are expected to become more affordable, the rate of decline might not be as significant as in previous years. This is partly attributed to new car supply disruptions, which caused a temporary rise in used car prices. However, as these issues are resolved, used car prices are projected to resume their downward trend.
Dealers are often slow to adjust their prices, and this can be attributed to several factors. Firstly, dealers may have a higher markup on used cars, allowing them to maintain higher price points. They may also have concerns about having too much floor stock competing with new car options. As a result, they may be hesitant to order the same volume of new stock as they did before the COVID-19 pandemic. This reluctance to adapt to changing market conditions can create a sense of stagnation, with stock remaining on the floor for extended periods without selling.
Additionally, some dealers are reluctant to negotiate on prices, which can further slow down the price adjustment process. This inflexibility can lead to a disconnect between dealer prices and the evolving market dynamics. Consumers are increasingly considering novated leasing and exploring Chinese brands or electric vehicles, indicating a shift in consumer preferences that dealers need to acknowledge.
The slow response of dealers in adjusting their prices can have consequences. As buyers seek alternatives, established brands like Toyota and Volkswagen risk losing their market dominance if they fail to respond appropriately to changing consumer behaviours and preferences. Dealers need to adapt to the evolving landscape, which includes the growing popularity of electric vehicles and the increasing production of cars in China and Japan, which collectively exert downward pressure on used car prices.
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Electric vehicles are becoming more affordable
While the Australian automotive sector has witnessed fluctuations in new and used car prices, the focus on electric vehicles (EVs) is increasing. This shift towards EVs is driven by the growing affordability of these vehicles, thanks to a combination of factors. Firstly, a reduction in the cost of battery technology has played a significant role in making EVs more accessible. The cost of lithium-ion batteries, an essential component in EV battery packs, is predicted to decrease from $US135 per kWh to $US58 per kilowatt hour by 2030. This will have a substantial impact on the overall price of EVs, making them more affordable for consumers.
Additionally, increased competition among EV manufacturers has contributed to the decreasing prices. The emergence of new brands, such as BYD, GWM, and MG, has intensified market competition and driven prices down. BYD, in particular, has made a significant impact in Australia with its aggressive EV pricing strategy, quickly expanding its range to include multiple models. Other brands, like Geely with its EX5 model and Chery with the Omoda E5, are also entering the market with affordable options.
Furthermore, the phasing out of internal combustion engine (ICE) vehicles by major car manufacturers is another factor influencing the affordability of EVs. As more carmakers shift their focus towards EVs, the availability of these vehicles in the Australian market will increase, driving down prices. This trend is already evident, with 17,243 EVs sold in Australia in 2021, a significant increase from the 6,900 sold in 2020.
While the demand for EVs in Australia has been relatively low compared to other countries, this is expected to change. The combination of increasing EV options, improving infrastructure, and the potential introduction of highly anticipated models, such as the Tesla Model Y, will likely spur demand and make EVs even more affordable in the coming years.
Overall, the Australian market is witnessing a shift towards more affordable electric vehicles. With a range of factors driving down prices and increasing consumer interest, EVs are becoming a more viable option for Australian motorists. As the market continues to evolve, it is likely that we will see further advancements in EV affordability and accessibility.
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Frequently asked questions
Yes, used car prices are dropping in Australia. In July 2025, the average listing price for a used car was $25,512. This decrease in price is due to a variety of factors, including seasonality, tariff worries, and economic recovery efforts.
There are a variety of factors that influence the automotive market, such as economic conditions, consumer preferences, and industry trends. In Australia, used car prices are dropping due to a combination of seasonality, tariff worries, and economic recovery efforts. Additionally, increased car production in China and Japan has put downward pressure on used car prices.
It is difficult to forecast used car prices in Australia due to the complex and ever-changing nature of the automotive market. However, financial intelligence firm Moody’s Analytics expects prices to continue their downward trajectory, citing improvements in new car supply and high-interest rates that will likely reduce demand for used cars.
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