Are you looking for a used car deal this year? it is essential to be aware of the present fluctuating used car market dynamics to get the best deal.
Over the past two years, the used car purchasing process has been tricky for many. The shortage of microchips caused a drop in the production of new cars, and as a result, shoppers were forced to look for used cars and the cost of these vehicles rose significantly.
Lots of people were unable to afford the prices, while others decided to wait until there was a wider selection of cars. It appears that used-car prices have now peaked, and they will drop in 2023. This article outlines what the current market looks like and what people should be aware of when purchasing a used car or exchanging their own vehicle this year.
At German Precision, we assist hundreds of car buyers in achieving cost savings and preventing them from making a wrong purchase with our pre purchase inspection service. We are real people here to assist you in saving your money.
Used Car Prices Starting To Ease
Mike Costello from Carexpert.com.au published an article on 20 December 2022 saying that the pricing of used vehicles in Australia has been on a downward trend for the past few months, which is providing some relief to customers who previously could not afford the expensive market.
He mentioned that “According to Moody's Analytics, the Used Vehicle Price Index has gone down another 2% from October to November. The figures demonstrate that the average prices of used vehicles are now lower than they were at the beginning of the year. In May 2022, the prices of used vehicles were 18.4% higher than they were in May 2021. Nevertheless, the average prices of used cars are still 55% greater than they were in January 2020, prior to the pandemic.”
He further explained “that this wasn't an accident. The COVID-19 pandemic caused manufacturers to have fewer new cars available, and inflation increased the cost of owning a vehicle, which drove up the demand for used ones. This is a fundamental economic principle that has caused prices to rise.”
According to the report, the cost of used vehicles has been decreasing on a month-to-month basis for the past six months. This downward trend is being caused by the enhancement of global supply chains, particularly in the semiconductor chip sector.
Used-car prices will keep on decreasing significantly in the short and long run because of the increasing availability of vehicles and decreasing demand. This trend is predicted to linger until the mid of 2023 as the market endeavours to establish equilibrium prices.
Despite that, it is unlikely that the prices of goods and services will return to their prior levels before the pandemic. This is due to the fact that the cost of replacement products, such as new cars, has gone up, leading to a floor being reached on a possible decrease in prices.
The market is projected to keep on declining gradually as inventories increase, although the value of used vehicles is dependent on macroeconomic conditions. Furthermore, if the international economic downturn has a negative impact on Australia's economy, it is likely that a decrease in demand will cause prices to drop more rapidly than anticipated.
Why Are Used Car Prices so Likely to Drop More in 2023?
- The amount of new vehicles available is currently at its highest level since the start of 2020. More consumers are choosing to go with new models, and due to costs of living/interest rate/energy prices, many consumers are looking into Hybrid and especially EV, which is causing a decline in the demand for used cars.
- Concerns about a downturn in the economy have led people who are considering making a purchase to reduce their spending and put away more money.
This means if you plan on purchasing a vehicle in 2023, be cautious when paying so that you don't overspend since great offers should be available.
Strategies For Obtaining The Best Deal on Used Cars
German Precision is a reputable organisation in Melbourne that offers car inspection services. We assist individuals to save money on car deals. For that reason, we provide hundreds of free guides and resources ( click here for more).
Do Not Purchase Without a Pre Purchase Inspection
Even though used car prices are dropping, it is still important to do a pre-purchase inspection before making a purchase. A pre-purchase inspection is a thorough evaluation of a used car by a mechanic or other qualified professional to assess its condition and identify any potential issues.
This is important because it helps you to make an informed decision about the car you are considering purchasing and ensures that you are aware of any potential problems that may need to be addressed.
One of the main benefits of a pre-purchase inspection is that it can help you to identify any hidden issues with the car. Even if a car looks good on the outside, it may have hidden problems that are not immediately visible. A pre-purchase inspection can help to uncover these issues, which can save you money in the long run by avoiding a potentially costly repair.
A pre-purchase inspection can also help you to negotiate a better price for the car. If the inspection reveals that the car has significant issues, you may be able to negotiate a lower price or walk away from the deal altogether.
Bargain Like A Pro
Knowing how to proficiently bargain for car prices can lead to many dollars in savings. As car loan interest rates are increasing, securing a few hundred or even a thousand dollars off a deal will yield greater savings in financing expenses in the long run. We understand that bargaining can be a difficult task, but we believe that it is worth the effort.