The COVID-19 pandemic has been good news for Australia’s second-hand car market with prices jumping 35 per cent last year.
Moody’s Analytics says the increase was fuelled by limited supplies of new vehicles, fewer trade-ins and increased demand.
“Australian used-vehicle prices experienced a year unlike any before,” it said in its analysis released on Monday.
“This incredible jump in prices is made more improbable because it happened as the nation endured numerous lockdown orders, devastating job losses and the first recession in a generation.”
The company said the pandemic’s impact on prices threw out relationships between traditional economic indicators, including unemployment.
It said fears about the virus also caused people to shun public transport while the number of vehicles available for sale was reduced with lease contracts on many vehicles pushed out as people drove less.
Sales of second-hand vehicles at auction fell about 20 per cent in 2020 compared to the previous year, largely because of a lack of stock.
Moody’s said demand across the used-car sector was now thought to have peaked with prices likely to fall in the first half of 2021, with some people anticipating a return to public transport as the roll-out of a vaccine suggested an end to the pandemic was in sight.
But the company said exactly how the fall in prices would play out remained to be seen with the market never before experiencing such a sharp rise.
“A lack of precedent is driving considerable uncertainty about how prices will wind down – slow and steady or steep and sudden,” it said.