Prices for used cars in Australia jumped 21 percent last year with low inventory and a long shortage of new cars that are boosting growth.
In its latest report, Moody’s Analytics said prices will rise again in 2022, but by a more modest 3.6 percent before they begin to decline in 2023.
“High prices for used cars will be supported by steady demand and shortages of new and used goods,” the company said.
“Without the ability to increase the supply of used cars, prices will remain high in the near future.”
The Australian new car market was restrained during 2021 by slow deliveries as a shortage of semiconductors cut production around the world.
This deficit was expected to narrow in the third quarter of this year, and as new car production grows, prices for used cars should cool.
“The shortage of new vehicles has arisen along with the reduction in the supply of used cars – drivers are unwilling or unable to sell their vehicles,” – said in a statement Moody’s Analytics.
“Together, these trends have created a perfect storm that manifests itself in unprecedented prices.
“Auction stocks, low since mid-2020, have declined even more in the final months of 2021, ending the year at a record low.
“In short, car owners are sitting uncomfortably.”
The report says the local situation with COVID-19 has also affected used car prices, which fell in the third quarter of last year amid a severe blockade in New South Wales and Victoria.
But when those constraints were eased, household spending and demand for cars recovered, causing prices to jump again.