The price of used cars in Australia has reached insane levels that buyers are finding the high price hard to believe. It comes as no surprise, though, considering the general perception that there’s a yawning gap between what you pay for used cars and those come fresh off the assembly line. So, with prices remaining high, we ask: Will used car prices drop in 2021?
Unfortunately, used car prices will probably not drop in 2021. Several factors conspire to push this pricing trend and will likely keep it that way for quite some time. The silver lining here is that used car prices will eventually come down but may take a few years before that happens.
We’re going to dive a little bit deeper into this topic in the following sections.
Why Are Used Cars Expensive in Australia This Year?
Firstly, let’s begin with a quick recap. Why on earth are used car prices so high in Australia in the first place? Well, we’ve covered the issue of Aussie used car prices 2021 earlier. It will help if you read that article to get the backstory.
Here's the short version: Many different factors are converging, pushing used car prices up. As you might've guessed already, many of those reasons are related to the global pandemic. Still, there are a couple of non-pandemic reasons as well.
Reasons for the Increase in Used Car Price in Australia
Those reasons include:
‘COVID Tax’ - Not an official tax, but it’s a term that people are using to describe the combination of three factors:
- People’s fear of using public transportation – this increases the demand for used cars.
- Global supply chain issues delay the arrival of new car models - fewer new models are available for purchase, so more people are shopping for used ones instead, increasing demand further.
- Changes in tourism habits - overseas and aeroplane travels are rare, so more people are hitting the backroads instead. With shortage in new cars, it means more people are using second-hand cars, pushing up demand and prices even more.
Non-COVID reasons:
- People still want discontinued models, and they can only get them on the used car market. Higher demand = higher prices.
- Cars have gotten a lot better in the past few years in terms of both safety and quality. So, even those that end up at used car dealerships are still pretty excellent vehicles, so more people are willing to buy them even though they're second-hand.
Bottom line? Prices for used cars are high because the demand for them is high, driven by a handful of COVID and non-COVID related reasons, all conspiring to shoot the prices up.
Will Used Car Prices Drop Any Time Soon?
The classic notion of cheap used cars or ‘beater cars’ is probably becoming a thing of the past. If you’re wondering whether or not used car prices will drop any time soon, the answer is no, at least not for the next couple of years.
One, the COVID-related reasons are here to stay for quite a while. The automotive industry is still grappling with the effects of the pandemic, and that includes the used car market as well.
Sure, the rollout of vaccines globally gives everyone hope that the worst is over. Still, you need to bear in mind that it will take a few years before everyone gets the vaccine and COVID-19 becomes a non-issue.
Two, even if the pandemic were to disappear overnight, it would not magically take away the two non-COVID-related reasons for high used car prices. The demand for discontinued models will still be there, and cars are much better these days, even when they're second-hand.
Even if the pandemic ended right now, many people would still be wary of using public transportation. I, for one, would prefer to err on the side of caution and avoid crowds, and many would choose to drive their own vehicles to go to work or elsewhere.
So, if you’re planning on buying a car in the near future and prices remain high, it might be worth considering paying just a little extra for a brand new vehicle instead.
What Is the Best Way to Buy a Used Car in 2021?
If you want to buy a used car in Australia in 2021, the best thing you can do is type 'used car Australia’ on your browser to shop for models and dealers. Some used car models are better than others, so check out our 2020 List of the Best Used Cars to Buy in Australia to see if there are any models you fancy.
Check Out Carpart.com.au!
Even though you can buy cars online these days, the best way to buy a used car even in 2021 is to see it up close with your own two eyes. That way, you'll know what you're buying and who you're buying it from.
One good way to do that is to check out our listing on Carpart.com.au. You’ll find used cars posted by dealers and private individuals with descriptions, specs, and the sellers’ contact details. You may also use our Directories to help you find reliable used car dealers near you so you can give them a call first.
Once you've narrowed your choices down to the best ones, it's also best to give the car(s) a thorough inspection to ensure that everything is in good working order.
There’s no need to stress about preparing your own ‘used car inspection checklist’ because we’ve got that covered for you as well.
To learn everything there is to know about buying a used car, check out the blog over at Carpart.com.au. You’ll find several guides on what to look for when inspecting or buying a used car and the best ways to maintain cars as well.
By Ray Hasbollah