The impact of import delays on new and used car sales in Australia

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95 business pininfarina factory production line

New and use car prices are surging and new stock is shrinking, putting pressure on the whole market.

Working in the car industry has been tough over the last two years amid the COVID-19 pandemic – the biggest challenge the automotive sector has faced is a supply chain crunch and the unexpected global semiconductor shortage, which has led to numerous delays in production.

Even despite the delays – which have blown out to as long as seven months or more – Australians are still buying cars, often sight unseen. Australian car sales have surged 33 per cent year on year (October 2020 to 2021) despite a world downturn, according to the Federal Chamber of Automotive Industries.

With fewer cars coming on shore, it’s also impacted the second-hand car market.

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A Real Seller’s Market

The delays caused have changed the car market for both buyers and sellers. It means bargain hunters that wait for ex-fleet vehicles to come to market have also been tied up by shortages. According to the Australian Bureau of Statistics, the average age of a roadworthy, registered vehicle is 10.6 years, an increase over last year. Departments are holding on to their vehicles longer, which means demand in this sector is high while supply is low. There’s a distinct lack of confidence among fleet buyers – if they sell prematurely, how long will it take to replace them?

Though it’s a real seller’s market, dealers can’t capitalise on the demand as supply crunches hamper their efforts. Bill Tsouvalas, Managing Director of Savvy, says that haggling has become a lot harder amid the shortages.

“Whether you’ve read Getting to Yes or Never Split the Difference or something else, all the negotiation skills in the world aren’t going to save you that much on a car whether it’s still on the production line or out in the wild. The fact of the matter is, dealers have the leverage. If you want to get the car you really desire, you’re going to have to wait for it, and you’re going to have to pay more for it.”

3 volkswagen factory workers

There’s not much relief in the used car market. Used car prices, according to the ABC, are 37 per cent above the pre-pandemic high set in February of 2020.

It is putting the crunch on buyers and on manufacturers who just can’t get stock in fast enough. But thinking outside the box on how you can save money on a car purchase, beyond the usual haggling one would expect to do, can put considerable dollars back into the pocket – and that is on your finance.

Lower Interest, Levels Out?

There’s not much one can do about car prices at the moment – but there is a lot buyers can do about finance. “Interest rates are as low as they’re going to go,” Tsouvalas says. “It’s a seller’s market for cars, but it certainly is a buyer’s market for car loans. Getting a good deal on a car loan is made easier if you approach a broker that efficiently compare different car loans from multiple banks and lenders. It could save you significantly.”

Tsouvalas also suggests that buyers aim for pre-approval and look for car deals as they come available. “Pre-approval gives you a price ceiling which dealers have to match if they want to make a sale. They all want to make a sale – especially at the end of the month when quotas need to be filled. It might not be much, but it can definitely give you an edge.”

Remember to consult a financial professional before applying for loan products.

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