Used Car Prices Show Signs of Slowing: Is the Market Stabilizing?

Is the used car market finally finding its balance after months of price growth?

April marks a turning point for the used car market as prices begin to stabilize after months of growth. The recent increase in prices followed a period of decline in vehicle production and a shortage of semiconductor chips. Moody’s Analytics predicts a continued decline in the market due to improved supply and high interest rates. However, there are factors that could disrupt this trend, including global supply chain issues. Are we finally seeing a shift in the used car market?

The ripple effects of conflicts overseas have contributed to the rise in used car prices, but it appears that growth is slowing down. April saw only a modest increase of 0.15% in used vehicle prices, which is a positive sign for buyers. This growth follows a 1.8% increase from February to March, indicating a potential stabilization in the market. However, it is important to note that prices in April are still 4.9% lower than the previous year, showing that there is still room for improvement.

The used car segment experienced a minor increase of 1.1% from March to April. Interestingly, used utes and SUVs saw a decline in prices by 0.15%. This decline in prices for popular vehicle types is contributing to the overall slowdown in used vehicle price growth. Moody’s Analytics predicts that this decline will continue due to improved supply and the negative impact of high interest rates. The growth of global vehicle supply, particularly in Australia, is also expected to put downward pressure on used vehicle prices.

One of the factors driving the decline in used vehicle prices is lingering inflation and high borrowing costs. These factors are expected to soften spending and have flow-on effects in the used vehicle market. Catarina Nero, an associate economist at Moody’s Analytics, highlights that the forecast is susceptible to upward price pressures. Any disruptions in the supply chain or issues related to transportation costs could compel car manufacturers to raise prices, which would impact both the new-vehicle and used-vehicle markets.

Despite the recent slowdown in price growth, used car prices are still significantly higher than pre-pandemic levels. They have come down by 14.3% from their peak in May 2022, but remain 47% higher than the levels in April 2019. This highlights the lasting impact of the pandemic on the used car market. As prices gradually stabilize, it will be interesting to see how the market continues to evolve and whether buyers can expect further improvements in the coming months.

• Used vehicle prices increased by 0.15% in April, in line with expectations.
• The index for April is 4.9% lower than the previous year.
• Used utes and SUVs experienced a decline in prices.
• The expected decline in the used vehicle market is attributed to improved supply and high interest rates.
• Prices are still significantly higher than pre-pandemic levels.

April marks a turning point for the used car market as prices show signs of slowing down. The increase of only 0.15% in used vehicle prices indicates a potential stabilization in the market. However, prices are still significantly higher than pre-pandemic levels, highlighting the lasting impact of the pandemic. As the market continues to evolve, factors such as improved supply and high interest rates will play a significant role in shaping future trends. Will buyers see further improvements in the coming months?