Do You Think The New Car Market Will Soften Anytime Soon?

So I’ve been waiting to buy a second car - either brand new or 1-2 years old - since the start of covid. We were literally about to buy in Jan/Feb 2020 and we got busy moving house then Covid hit.

It’s starting to get impractical surviving on one car but I hate buying anything without negotiation power. Does anyone think the market will soften anytime soon? I reckon we could survive 6-12 months more but obviously I know even once you buy there can be 12 month delays for delivery (if new) - though we would certainly consider second-hand options too but that’s just as bad at the moment with respect to pricing.

What’s everyone’s take?

Poll Options

  • 80
    Yes - I expect car prices to fall within 6 months
  • 303
    No - you’re dreaming, prices will stay high

Comments

  • +1

    Just get any second hand car locally to see you through! Especially if it's a second car, i wouldn't worry too much. Now is always better than later. Think of the convenience.

  • +1

    That Jan/Feb 2020 was the optimal window. A family member picked up an I30 around that time frame with a discount and immediate delivery. Now they are $5k more expensive.

    I think we will see further price increases for brand new before there is any drop. Prices wont drop until we see brand new stock sitting on showroom floors. second hand prices will drop as they are at ludicrous levels ands with tightening budgets people might be more willing to drop prices if they are serious about selling.

  • +1

    More than 12 months is my gut feeling.
    Once we get flooded with reasonably priced brand new Chinese EVs then the market will crumble.

    • +1

      Think I’d use ‘correct’ not ‘crumble’. Prices are unlikely to go significantly backwards.

  • When interest rates start to bit and the increase in fuel prices I expect the SUV market to take a price hit.
    Soccer mums want be able to afford them and will switch back to smaller cars.

  • Bought a new car Oct 2019, if I were to sell it now I would make money.

    Go figure ¯\_(ツ)_/¯

    • +5

      you would unless you had to buy another car :D
      false economy

  • +1

    No, not soon.

    The car manufacturers are loving the current high demand and low supply scenario because they can dictate the price and ignore any kind of haggling. You either buy at RRP or walk out. Most places just recommend buying online and waiting for delivery now.

    The only way things will change are if a new manufacturer comes in and undercuts the big boys and start creating a proper competition. There's BYD and other international brands coming into the EV market in the next few years with prices that undercut current EV prices.
    IMO, If they can keep up with the demand and if people can get passed their "but China" phobia, then we can see prices for new and used cars stop being absolutely ridiculous.

    • Car manufacturers would rather have plentiful cars in the current market, than lose business to the used market. Prices have gone up max 10% post covid, yet I can guarantee they're losing more than 10% of the customer base due to supply

    • I suspect that ‘China car bad’ is going to be less relevant for EVs. Plenty of people want a cheap EV. I wouldn’t be surprised if fleets start buying plenty of them too.

      If the Chinese can make reasonably reliable parts (door handles, switches etc) and stable electronics for them they’ll be perfectly acceptable as commuter/second cars. Chinese cars have improved markedly over the years. Take away hundreds of moving engine parts and replace with an electric motor and their reliability of drivetrain should improve a lot.

  • In relative terms they with soften over the next 6 months.

    In absolute terms inflation will have an impact though so the raw purchase prices will likely stay the same or be slightly hire.

  • Unlikely. And most dealerships are going to a fixed price model with no negotiation of vehicle price. Honda and Mercedes are already doing it. When we bought our Mazda a few months back the dealership indicated that this was the way they were likely to be going. With backlogs on vehicles with most manufacturers for the foreseeable future, you are unlikely to see much negotiation power. And by then, some of these manufacturers may have moved to fixed price. We were only able to negotiate most of the accessories being free

    • +1

      Agree with the fixed price model going forwards, but they’ll set the price to what the market will bear. The only thing that’s stopping fixed price models now is the furphy that buyer think they are getting a great deal by knocking $ off the RRP - hint: that means the RRP is set artificially high to make you feel all warm and fuzzy.

      if/when a couple of manufacturers start getting supply sorted and you can pick up a new car within a few days then other manufacturers are going to want to follow. The other manufacturers supply constraints will need to be sorted out or they’ll lose business. Not everyone can plan for a new car, older ones break down and get crashed etc. if they hold out and keep their order books full and long waits they aren’t going to keep customers. If you’ve got the choice between two similar mid sized SUVs and one can arrive next week and the other has 6-12months wait what will many do?

  • Prices will come down eventually. Where there's money to be made undercutting you'll get undercutting. Factories to make these cheaper cars a few years from now are probably already being built.

  • +1

    Unlikely
    I don't think prices will ever go down. Maybe stabilise and allow you to negotiate in maybe 4 to 5 years.

    And why would used car prices go down? It's unlikely the market will be flooded with thousands of unused cars.

    • No, but it will be flooded in the next few years with cheap Chinese new cars that people will offload their used cars for.

  • Just purchase a Bentley Bentayga SUV. Australians are all rich; they can afford one. It perfectly complements their 5 investments properties.

  • +1

    Rising fuel costs
    Rising energy costs
    Rising interest rates
    Generally falling house prices

    Many people will take a hit to their disposable income. This may take some heat off the demand side.

    That said, these factors may impact the supply side as well. Supply is a global issue.

  • Should come back down in a couple of years or so.

  • Watching the second hand car market it's just like any other time, if you know what you're going to buy and watch it closely, deals come up. Similar to most other purchases if you're in a rush you're going to lose out.

    Haven't been watching the new car market though, it's not as fun to do.

  • used car market should come down little over next few month new car are not cheap at moment with long wait time i got my in 2018 Christmas time 23,990 and i see them selling used for 27,990

  • Nope. Too many factors pushing up prices. Will take years. May be 2, may be more.

  • +3

    My friend sells Toyotas and he made 210k last year, he showed me his tax return.

    They have back orders on RAV4 for the next 18 months.

    Ain't going down anytime soon.

    Literally every person out of Uni buys themselves a brand new car, because they deserve it and have worked so hard 😬🤣

    Plus, aren't they opening immigration? That's alot of cars needed for people moving to Australia soon.

    • +3

      Buying a new car coming out of uni, I guess they didn't learn anything useful from uni then haha.

  • +3

    With 7 to 8% interest rates hitting our mortgages soon, 5 to 10k on a new car will be the last thing on your worry list.

    Cant wait to see how hard the US federal reserve shits on us in the next 12 to 24months.

  • +1

    If you need a car in the next 2 years, there is no point in looking for a 1-2 year old car with low kms. These cars are going to be selling for maybe 1-2k lower than the price of a new car if you are lucky, a lot of them I saw was selling for the price of a new one. The good thing is some dealers are getting stock in. I was watching the dealer's website and bought a new i30 hatch off the showroom floor that came in just 1 day before.

    You will not get any discount as cars are still in demand and if anything prices are going up partly due to inflation, low exchange rate and just because the dealer and manufacturer can sell them at those prices.

  • +1

    I hate buying anything without negotiation

    Use your power to get some free car mats

  • Used cars, I'm starting to see high yield investment cars on the auction repo lots now. Models I would not typically see during covid, market has heaps of Tesla model 3 which i didn't see before.

    That said vendors are still thinking they can get covid pricing for their cars. Auction I attended last week I saw this, heaps of cars passed in no bids. This stalemate will go on for another year I suspect but certainly will see a glut a good used cars coming up. New I wouldn't touch, manufactures are drunk on covid profiteering margins.

    • Seeing heaps of Tesla 3 could be as a result of the Y being avaialable and all the fanboys wanting the latest - or they bought a 3 because it was availabld but really wanted more of an SUV, so upgraded asap.

      • Certainly the case, just previously they would of been sold quite fast, now sitting on lots.

      • It's mostly because Tesla are dogshit cars, and the majors are starting to come out with very good hybrids / EV's in their own right that are vastly superior in every concievable metric, let alone reliability.

        That and Elon has made owning one go from "cool" to "nazi-adjacent" in short ordder.

  • -1

    Do you need two cars? Can't you just use uber in those limited instances that you do need a second car, you will probably save money like this. What about car share like Goget, Pop car or Car next door? E-bike?

  • Used cars are starting to come down a bit, I've been watching for the last 6 months or so. Many models were selling around the same or more than brand new, that's no longer the case. Chip shortages for new cars I guess will be resolved after 1-2 years, which will also relieve pressure on used market. I think we're starting to come out of the "peak", wait another 6-12 months and I predict you'll see used car prices continue decreasing. At some point the supply of cars will catch up to the demand, there is not a finite number of cars forever. Rising living costs will tempt those with unnecessary vehicles to off load them.

  • The question can't be answered.

    Everything will soften once Russia stops invading Ukraine and China stop chasing Covid zero.

  • Prices probably won't soften, and as others have said will likely go up in the short term. Wait times will probably get better. Ordered a vehicle in May and got given a delivery estimate of Feb-Apr 2023, and it is actually being delivered within the next 4 weeks.

    Edit: Also worth noting that many brands are changing their dealer distribution model, and are moving to fixed-price 'online' style distribution. This will likely further reduce consumer buying power and your ability to negotiate.

  • Interesting read,

    The general consensus among major multi-franchise new-car dealer networks canvassed by Drive is that in the next 12 to 18 months, they expect there will be a slowdown in demand – just as car factories finally catch up with supply shortages.

    “It will be perfect buying conditions in about 12 to 18 months, based on our current estimates, but not so good for dealers,” said one veteran showroom owner.

    “The car factories will finally catch up, and demand will come off the boil as some buyers are put off by rising interest rates or other economic uncertainty. So we will probably end up with a dip in demand just as a tonne of new cars start heading our way.

    https://www.drive.com.au/news/interest-rate-rise-applies-the…

    “Plus we expect as interest rates rise, more lenders will start to knock back more finance applications because the higher interest rates will stretch people’s ability to service a loan.”

  • I doubt prices will come down but should stabilise as supply/demand/shortages normalise. Of course if Taiwan becomes a conflict zone then we'll see chip shortages like never before.

  • Don’t think prices will go down in terms of absolute value but manufacturers probably won’t see the queues for new stock that they have been for the last 4 years.

    I wouldn’t expect prices to hike even more unless inflation went even crazier. In which case, buying a new car would probably not be first on people’s lists of problems.

  • As someone who just ordered a new car and is selling his old car at a premium from what I've seen you've got 3 options:

    -Buy something brand new
    -Buy something second hand and pay an insane premium if you want something reasonably modern. Probably not that much lower than brand new just no waiting.
    -Buy the cheapest reliable shitbox you can find, wait till prices go back to normal. Of course if you've got kids / safety is a priority this might not be viable.

  • Amazing how most posters in this thread have no idea what they're talking about.

    Used cars on carsales.com.au are about to hit a record high: https://twitter.com/AvidCommentator/status/15876142089630146…

    The market is absolutely being flooded with supply, which we know drives down prices. Lower prices are coming, and they're coming soon.

    • supply of new cars is returning, but still plenty of models with big wait times. Prices may drop if more people decide not to buy due to rising interest rates.

      Does record numbers of used cars on carsales mean more for sale or increased market domination resulting in less listings on other platforms? Maybe more dealers are in on the carsales game. Maybe some of those used cars are being listed solely because there are good prices around and some are trying to cash out.

    • Highest number of cars for private sale since early February 2020

      And how many of those are trying to cash in on the current bumper resale prices?

      New car wait times are still a thing, and the used car market is dependent on those. Until you can walk in and buy a (popular) new car and take delivery within a month or so, used car prices will still be inflated

      • And how many of those are trying to cash in on the current bumper resale prices?

        New car wait times are still a thing, and the used car market is dependent on those. Until you can walk in and buy a (popular) new car and take delivery within a month or so, used car prices will still be inflated

        You seem not to understand the basics of supply and demand.

        Supply is skyrocketing compared to where it was 12 months ago. In addition to record used cars available on the market, new car sales volumes are rocketing higher at well over 10%+ YoY, showing supply is speeding up at a huge pace.

        Demand is also going to start crashing hard as inflation and rising interest rates start to eat into discretionary spend, of which a new car is the biggest item.

        Supply up, demand down = big market softening.

        • You don't seem to understand that I work for the biggest car brand in the country, and with etas on the most popular cars at a minimum of 12 months (and some up to 2-3 years), I can judge how quickly before new car stock will actually be plentiful.

          And given the brand has been failing to meet production estimates lately, its safe to say that this certainly won't be changing over the short term

          We had a very strong month of sales last month, when everyone would think it was doom and gloom due to interest rates etc but… It wasn't. It was very strong with very good margins

          • @spackbace: Oh don't worry, your occupation is no secret.

            It's like asking a real estate agent if it is a good time to sell your house. 'Market's never been hotter' lol.

            Fortunately we have plenty of data to show I'm correct.

            New car wait times are already peaking and heading south.

            Indeed, I'd be getting very nervous if I were a Toyota salesperson. Plenty of competitors' wait times have very clearly peaked.

            • @vetopower: Lol not nervous at all. Sure, wait times aren't ideal but of course you can buy a standard ICE car sooner than a hybrid Toyota. Hell, most of our petrol models are available within 12 months, but that's not what the buying public want right now, they want some for of electrification.

              But trust me, I don't care what the wait times are for other brands, because they don't offer the same thing

              VFACTS September:

              Toyota HiLux – 5170
              Ford Ranger – 4890
              Tesla Model Y – 4359
              Mazda CX-5 – 2439
              Mitsubishi Triton – 2319
              Isuzu D-Max – 1924
              Mitsubishi Outlander – 1879
              Toyota RAV4 – 1856
              Kia Sportage – 1775
              Hyundai i30 –1733
              Toyota Prado – 1698
              Tesla Model 3 – 1610
              Hyundai Tucson – 1579
              Toyota Corolla – 1554
              MG 3 – 1423
              Mitsubishi ASX – 1408
              GWM Haval H6 – 1294
              Kia Cerato – 1257
              Hyundai Kona – 1098
              Mazda CX-3 – 1094

              4 models in the top 20, and that's only cars rolling out the door, the order banks are insane for RAV4 and LC300

              • @spackbace:

                Lol not nervous at all.

                And here I was thinking car dealers got paid when they delivered cars to customers ;)

                But trust me, I don't care what the wait times are for other brands, because they don't offer the same thing

                We're talking about the whole market, so it is entirely relevant to the discussion.

                For the first time in 2 years wait times have decreased (from your link) and you are saying it’s all over? What if that’s an anomaly and next month it’s going back up? One result is not a trend. Yes, it’s a good sign and likely getting better but it’s still going to take a while to ‘normalise’ (whatever that means)

                @Euphemistic: Name me one fact that suggests the demand/supply is going to get worst from here.

                I have provided you with an abundance of facts that suggest the demand/supply is going to get better. Let me recap them for you in case you are struggling to follow along:
                - Wait times for new cars are decreasing (supply normalising; demand clearing)
                - Used cars for sale are at record highs (supply increasing)
                - Interest rates rising at the fastest rate in 40 years (reducing money for non-housing items and thus hitting demand)
                - Inflation at the highest rate in 30 years (reducing real wages and thus hitting demand)

                Plus how biased is the data, as they're a brokerage service do they want to over promise and under deliver to try to beat out other brokers?

                Not a great way to look at the market as it sits right now

                Once again, not a single fact from you suggesting that the demand/supply equation is going to get worse from here, apart from, of course, the inference of your company's inability to manage its supply chain.

                • @vetopower:

                  I have provided you with an abundance of facts

                  Thanks, those are certainly all factors pointing toward a reduction in demand. However, my opinion is that within the timeframe OP was talking about there won’t be any significant change in the market. Plenty of others seem to agree. We’re in a weird time, no one really knows what’s going to happen.

                  If you want to hang on for 6-12 months in the hope the market dies and prices crash, you’ll be up against inflation which may well keep prices high. Hedge your bets. You’re crystal ball might be calibrated differently to mine.

                  End of the day, I’d buy now if I needed now, IMO it’s not worth waiting in a gamble to see if prices drop.

                  • @Euphemistic:

                    If you want to hang on for 6-12 months in the hope the market dies and prices crash, you’ll be up against inflation which may well keep prices high. Hedge your bets. You’re crystal ball might be calibrated differently to mine.

                    The car market went from normal to crazy in the space of 6-12 months. It could easily reverse a large part of that craziness in the same timeframe. The same thing is already well under way in the housing market. Both operate with a lag vis-a-vis economic conditions, but both can change rapidly in a short space of time.

                    End of the day, I’d buy now if I needed now, IMO it’s not worth waiting in a gamble to see if prices drop.

                    They're open to second hand cars. The second hand car market is rapidly normalising. As I said, greater supply than before the pandemic. They don't need to gamble.

            • @vetopower:

              New car wait times are already peaking and heading south(pricemycar.com.au).

              For the first time in 2 years wait times have decreased (from your link) and you are saying it’s all over? What if that’s an anomaly and next month it’s going back up? One result is not a trend. Yes, it’s a good sign and likely getting better but it’s still going to take a while to ‘normalise’ (whatever that means)

              • @Euphemistic: The stats are skewed as well, only taking each model/brand as an average (eg average wait time for RAV4 is apparently ~5 months)

                Plus how biased is the data, as they're a brokerage service do they want to over promise and under deliver to try to beat out other brokers?

                Not a great way to look at the market as it sits right now

                • @spackbace: you only have to go on the FB RAV4 Hybrid group(Australians waiting for new RAV4s) a lot of very unhappy people, a lot are getting conflicting delivery times.

                  • @Hackney: Hackney Unfortunately some salespeople with tell customers whatever to make them they can get a car sooner just to win the business. Salespeople that do this don't do the dealership any favours as you have angry customers calling the dealership and manufacture complaining they have been lied too. This then causes poor SSI/CSI results which if a dealership doesn't hit a certain KPI the manufacture can take a dealerships franchise license away from them. Most of the time it will be the manufacture not being able to meet the original ETA. The good Salepeople are contacting their customers every week even if there hasn't been any change. The poor ones will contact their customers on or after the ETA has passed and advise them of the delay. The very poor ones will dodge phone calls… Forums are dangerous because you have that one (profanity) that will say "I just walked into a dealership and drove out in this and got a massive discount" They do this to fire everyone up.

                • +1

                  @spackbace: Spaceback don't you realise all car salepeople are liars…… Vetopower has a crystal ball and media is always right, just look at covid response and interest rates not raising until 2024. The top 10 manufactures in Australia all have order banks 6 months +. Financing cars at the moment is tough but people are finding other sources to pay for their vehicles and when people realise they can't get 2.9% on a car loan anymore they will just accept it. There's still issues with supply and everytime there is a flood a war, etc it makes the supply worse…… but what would I know, I only do it for a job every day.

                  • @fredz0r: Don’t forget interest rates have gone up not be able to afford a house could mean more $ for cars.

                    • +1

                      @Euphemistic: In the brand that I manage the fallover rate is 8-10% each month due to people not able to obtain finance/not able to afford the vehicle anymore. This hasn't changed in 24 months. My wife works for another brand in the finance department and it's the same percentage. I understand rates have gone up, but people still go ahead, or they find the cash. The natural need for vehicles is still there - Insurance replacements, business fleet vehicles, cars breaking down, novated leases expiring, brothers, uncles' friends fish needs their car back…

                      • @fredz0r: That’s kinda my point. House pieces dropping because demand dropping because mortgage stress etc doesn’t apply equally to cars. Can’t afford a nice new home due to interest rate rises, but have paid down mortgage enough to have spare cash, use extra money for a new car instead.

                        Potentially it’s a bit like the covid surge in demand. Couldn’t travel, might as well enjoy anew car.

                  • @fredz0r: Used car prices in the United States just dropped 2.4% in a single month — the second largest drop since 2003.

                    The facts once again confirming that I'm correct. Yet to see any facts from you, just a lot of anecdotes and empty vitriol from a vested interest LOL.

                    • @vetopower: What does that have to do with 1. The Australian Market and 2. NEW Car Prices….

                      • @fredz0r: I'll keep it brief, but happy to expand if you need some help understanding.

                        What caused the Australian car market (used and new) to skyrocket during COVID-19 was exactly the same as what caused the US car market to skyrocket over the same period — tight supply due to chip shortages, etc & increased demand to fiscal stimulus and redirected spend (eg no spend on services).

                        Just as the US car market is normalising, so will the Australian market, because the same factors are at play in both markets. Demand is cooling with rising interest rates & redirection of spend to services and supply is returning to normal levels.

                        If you think Australia is different from the US, note that consumer confidence in Australia hit the lowest level in 30 years this week. Do you think people are going to be rushing out to buy new cars given how pessimistic they are about the future state of their finances?

                        The new and used car markets are intimately linked to each other. Let me give you an example. If you could buy a perfectly acceptable five year old used car for $5, do you think many people would be willing to pay $50,000 for a new car of the same model instead? Of course not. As the prices of used cars come down, more people will elect to buy used cars, dropping demand for new cars, clearing the backlog.

                        What's happening in the car market is economics 101.

                        • +1

                          @vetopower: Yeah dude. You are 100% right. We’re all wrong.

                          Actually no. I think we’re arguing about ‘rapid’ ‘soon’ etc and all of us have a different interpretation of those very rubbery terms relating to the timeframe of when car prices will be ‘so much cheaper than now’. Your interpretation appears to be it’s all gonna crash in the next month (or real soon) and we’ll be back to pre pandemic market. Others of us seem to think the timeframe will be a bit longer (fairly soon). End of the day it’s a personal opinion and we aren’t going to be able to determine who is right for 6 months.

                        • @vetopower: You've got all the media facts. I need to get on the phone to the manufacture to stop sending me cars to the orders I still don't have filled

  • Needed a small Kia hatchback for Dec delivery. Called dealers and most would just laugh at the timeframe of thought of me asking for discounts. So I paid the driveaway price

  • No

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