Used car prices fell again in October, but they are still 60% above pre-pandemic levels.
Data from Moody’s Analytics shows used car prices fell for the fifth consecutive month and fell an average of 1.8% from September to October.
But they are still 8.6% higher than last year and 1.7% higher than at the beginning of 2022.
The companies forecast used car prices to continue to fall for the rest of the year, with larger vehicles expected to decline more rapidly as fuel prices rise.
It attributed the increased supply of new cars to the drop in used car prices, due to an improved supply of semiconductors.
In September, it took 26.3 weeks for a semiconductor to reach the final consumer, down from 27 weeks in August and the biggest month-on-month decline in several years.
Moody’s Analytics also noted that its supply chain stress index in China fell 17% year-on-year in September.
However, it warns the lead time will remain high until 2023.
Demand for transportation shows no sign of abating, helped by a strong labor market with the unemployment rate hitting 3.5% – one of the lowest since 1974. Wages also rose. 2.6% year-on-year in the June quarter.
However, it’s not all pink.
“There are risks to the vehicle market. Consumers are expected to react to rate hikes soon,” said Catarina Noro, associate economist at Moody’s Analytics.
“So far, the Reserve Bank of Australia has increased their cash rate by 2.75 percentage points since the start of the year and is expected to tighten further for the rest of 2022 and 2023.
“Lending rates went higher as prices of non-essentials like fuel and food rose.
“This adds to consumer anxiety and reduces budgets for discretionary items like cars.”
