What Happens Next?
Demand does not seem to be easing for popular models, particularly recreational vehicles, and SUV’s. Toyota stock new and used is in very short supply. It is hoped that new car deliveries will resume later in the year (2020) and the trade ins will come onto the market. Demand may drop after rent and mortgage deferrals are reduced or eliminated and people start to feel the bite of reality.
Are New Cars an Option?
The surge in used car prices has resulted in more people considering new cars. New cars could be a great option.
With the increased price of late model used cars equal to or in some cases higher than the cost of a new car. The downside is the buyer may have to wait for delivery of their new car (some models are 6 to 9 months away). New car stock levels are expected to improve over the coming months. Manufacturers are ramping up production (where possible) to pre Covid levels.
One of several factors that could prevent a ramp up in production is a resurgence of Covid-19 in Korea or Japan. Pricing for new cars could also rise if there is an increase in the $USD to $AUD exchange rate. Combined with any strengthening of the Japanese yen and Korean won versus the $AUD. In Australia, most of our new cars are imported from either Japan or Korea.
If you want to buy a car, new or used, ask yourself, do I want to pay these inflated prices, or can I wait six months (or longer) until prices stabilise. We are seeing instances of multiple offers on the same vehicle.
When a buyer hesitates, the car is often sold, and it is hard to find a replacement vehicle. If you want or need a car be decisive and buy the car. If a dealer does not discount or hold the car for you until you make up your mind do not be disappointed. In this market it is not likely happen because the dealers are finding it extremely difficult to find replacement stock.