In a recent update from Datium Insights, it’s been observed that Australian used car prices have seen an uptick of 1.3% in the past week, with SUVs experiencing the largest increase at 2.9%. This rise, however, comes against a backdrop of declining clearance rates, down 7.5% from last week, and a notable 19.4% dip in sales volumes.
The trend in the Australian used car market is particularly relevant to the immigrant communities from India and South Asia, who often represent a significant customer base in this sector. Unfortunately, specific data detailing their average spend on used cars, preferences, and the percentages from major cities like Sydney and Melbourne weren’t available in the resources I reviewed. However, broader insights into the car buying habits of Asian-born Australians, including those from India and other South Asian countries, offer an intriguing perspective.
A study by Roy Morgan Research in 2018 unveils that more than 20% of Chinese-born and 16% of Indian-born members of Generation Z in Australia, who drive cars, surpass the nation’s average in intending car ownership. This pattern extends to Millennials as well, with Asian-born individuals in this demographic showing a stronger likelihood of purchasing a new car within the next four years compared to the overall Australian population. Notably, the leading countries of origin for these Asian-born Millennials are China and India.
Interestingly, Asian-born Millennials, including those from India and other South Asian nations, demonstrate a preference for passenger vehicles over SUVs or light-commercial vehicles. Among those planning to buy a new car in the next four years, just over a third of Asian-born Millennials and only a quarter of Chinese-born Millennials intend to buy an SUV or a light-commercial vehicle. This contrasts with nearly half of Australian Millennials overall, who lean towards these types of vehicles.
Moreover, there’s a distinct difference in the brands favoured by Asian-born Millennials compared to the average Australian Millennial. Brands like Toyota, Volkswagen, Audi, BMW, and Hyundai are more popular among young Asian Australians, with preferences varying across different Asian communities.
The Australian used car market itself has been undergoing significant transformations, especially in 2023. Valued at USD 37.68 billion in 2021, the market is projected to reach USD 53.87 billion by 2027, growing at a Compound Annual Growth Rate (CAGR) of 6.14%. Factors such as the COVID-19 pandemic, which heightened the preference for private transportation, economic concerns prompting consumers to opt for used cars, and the digital transformation in online sales, have significantly contributed to this market evolution.
Hatchback vehicles are expected to maintain a considerable share in the market, their popularity bolstered by their flexibility and practicality in urban settings. Furthermore, recent analyses in 2023 indicate that the average prices of pre-owned vehicles are continuing to rise, although at a slower pace than in previous years. Prices under $200,000 have seen an average increase of 6.7% in February 2023 compared to the same month last year, with mainstream brand used cars experiencing a more significant increase of 8.1% year-on-year. However, this trend is not uniform across all segments, as prestige brands have shown more modest growth.
The pricing dynamics are influenced by various factors, including the pandemic’s impact, which led to inflated prices for in-demand vehicles like the Toyota LandCruiser and Ford Ranger due to supply shortages. However, indications suggest that this upward trend is starting to plateau, with models like the Mazda CX-5 showing a decrease in used prices compared to their peak several months ago.
Recent rate hikes by the Reserve Bank of Australia (RBA) have also impacted the used car market. Car loan interest rates are generally tied to the RBA rate. As the RBA rate climbs, so does the cost of financing for car loans, influencing consumer purchasing power. These rates are part of a broader economic context, encompassing the health of the Australian economy, household income levels, and consumption patterns.
The Australian used car market is in a phase of dynamic transition, shaped by economic factors, consumer preferences, and technological advancements in sales channels. The RBA’s rate hikes add another dimension to this evolving landscape, affecting both supply and demand in the market.
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Australian used #car prices, notably #SUVs, rose by 1.3%, despite declining clearance rates & a 19.4% sales volume dip. Asian-born millennials show preferences impacting market dynamics. RBA rate hikes influence pricing & demand. 📈🚗 #TheIndianSunhttps://t.co/yL89KssU3e
— The Indian Sun (@The_Indian_Sun) November 14, 2023