used car prices tumble

Nearly new and wheelie cheap
By ANTHONY BLACK
30oct05

SOARING new cars sales are a bonanza for second-hand buyers as ever-increasing stocks puts pressure on prices, industry spokesmen say.

A base model BA Falcon that sold new for $34,660 two years ago is worth about $22,000 on used car lots, says car sales magazine, Glass's Guide.
The news is even better for those wanting a used Mitsubishi Magna because the ES model has depreciated by almost 50 per cent in two years.

According to Glass's Guide, the Magna ES that sold new for $34,610 carries a used retail price tag of about $17,700. Average two-year-old Falcons and Magnas have 55,000 to 60,000km on the speedo.

Second-hand buyers are doing excellent deals because of excess stock flowing into used dealerships from bumper sales of new cars.

Recent figures show 84,440 new vehicles were sold last month, a 5 per cent rise on the same month last year. Increasing sales of small passenger cars and light cars partially stem from higher fuel prices, says the Federal Chamber of Automotive Industries. The Toyota Corolla was the biggest-selling model last month with 4950 bought.

New vehicle sales of 749,347 to the end of September were 39,100 more on the same nine months last year. With three months to go, new vehicle sales are expected to top last year's record of 955,229.

Car affordability was also driving new car sales. It took a worker on average weekly earnings 38 weeks to buy a new Ford Falcon, compared with 44 weeks 10 years ago, according to the FCAI

Chris D'Sousa, operations manager of Glass's Guide, said used car buyers were benefiting from new car depreciation of up to 40 per cent in two years.

He said used cars were also depreciating faster to the benefit of today's buyers. A two-year-old car bought in January was, on average, 15 per cent cheaper today.

"Historically used cars depreciate between 5 and 6 per cent a year," he said.

"This year's depreciation has been particularly bad, driven by healthy new car sales, reduced tariffs cutting new car prices and higher petrol prices."

Mr D'Sousa said greater demand for new smaller cars meant they did not depreciate as fast as family sedans.

He said while Falcons and Commodores depreciated by more than 35 per cent in the first two years, the Toyota Corolla, Nissan Pulsar and the Mitsubishi Lancer depreciated by up to 22 per cent.

Mr D'Sousa said used cars were still expensive compared with other world markets. He forecast that used car prices across the board would be relatively cheaper in the future.

He said a new Toyota Camry Altise V6 that sold for $32,490 two years ago was now available for about $23,200. A new VY Commodore executive had dropped from $34,200 to $21,800 today for the two-year-old car.

But car auctions sold two-year-old base model Falcons and Commodores for $15,000 to $16,000, according to Peter Stevenson, of the Auto Group Melbourne.

Mr Stevenson, the group's auction manager, said the State Government sold their cars at 30 months old, or when they had done 50,000km.

Mr Stevenson said the auction system was a true test of market value because cars sold for whatever "someone was prepared to pay" above the reserve price.

The sheer volume of cars on the market meant prices were constantly under pressure and that was good for buyers.

There were terrific bargains at auction for relatively new cars.

"Those who know what they want and are prepared to take a bit of a punt can do very well," Mr Stevenson said. His company guaranteed clear title, but buyers had to get their own roadworthy certificate.