This is an attempt to look at what is happening overseas and see if it impacts our NZ market. As 2024 begins there are a number of people talking about a price drop for new and used vehicles.
During the pandemic, inventory shortages became a big factor due to supply chain issues impacting on semi-conductors and automotive computer chips, and with it came higher prices due to fewer new and used cars available for purchase. Well into 2023 and then towards the end of that year, availability became a little more positive.
According to a number of reports we have seen, new vehicle availability has increased and continues to grow which will lift vehicle stock levels for 2024 and beyond. New car prices eased back in some places in late in 2023, signalling the peak in pricing may have finished. We also read that new vehicle supply is at its highest level since the middle of 2021.
In January 2024 an interesting fact was reported, vehicle sales jumped 12% in 2023 compared to the year prior, the biggest year-over-year increase since 1997.
The trend that experts are expecting to see in the USA and Canada, not sure about Europe, are that new vehicles sales will be increasing as people move towards newer technology.
The used vehicle market numbers would increase as buyers offload older vehicles. That jump in demand for more recent models means there could be less of a demand for used vehicles, for which prices have already been declining since the end of 2023.
We are not sure if this translates to the New Zealand market, we guess time will tell. However, 2024 and beyond the experts are saying they expect vehicle buyers having much more access to new vehicles and the used market will return back to a normal function.
It will remain to be seen if 2024 becomes a buyer’s market. The good news is that market forces are headed in the right direction. The global automakers are offering the best sales and incentives in years, aiming to increase sales volumes to achieve yearly sales goals and profitability. These developments are clear indicators of a market that is stabilising and adjusting to the challenges faced during the chip shortage and production interruptions of the past years.
Some data we spotted coming out of the USA and Canada indicate some easing of pricing in the used vehicle market. As we mentioned above it is not obvious this will be true in New Zealand. However, increasing supply and growing dealer incentives in those countries are beginning to ease price pressures, offering some relief in a rising rate environment.
For us to get a sense of where used car prices are headed in 2024, we can look at what we see happening there and the best leading indicator that we see is the wholesale used car price trends. At wholesale car auctions, used car prices have dropped 9% in two months. Some segments, such as used vans, compact cars, and luxury SUV crossovers, have dropped by 15% or greater. Are you looking to purchase a new or used vehicle? Maybe this trend will find its way down here.