Why are new and used car prices so high right now?
QUESTION
Hi John,
I have noticed quite a significant jump in prices of new cars, and used cars, in Melbourne. For example, a friend of mine bought a 2016 Toyota Corolla Hatch with 50,000 km about a year ago for $14,500 drive away (in Victoria). Now, similar Corollas with same km’s are for sale at around $18,000 - $19,000 drive away.
Same story with brand new cars.
I wanted to ask you if you have noticed a similar trend in other states and in Australia in general. And if you have, would you know the reasons?
I look forward to hear from you.
Kind Regards,
Belal
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ANSWER
Belal,
NEW CARS: Dealers are discounting less at a retail level because stock is less available - demand is high, relative to supply, therefore prices face upward pressure. Most car companies have, however, not raised prices.
USED CARS: Stock shortages of new cars have placed upward pressure on trade-in prices (because late-model used cars are an alternative to new cars for some buyers). Therefore, trade-in prices are historically high right now, as are used car prices generally.
JC
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