Are you in the market for a new or used car? You might be finding it difficult to track down the exact vehicle you’re after or you’ve noticed that the price of second hand cars has skyrocketed. Australia is in the midst of a new and used car shortage, so we’ve put together a few handy tips to help you navigate the current car market so you can land the perfect new ride.
Why is there a shortage of new and used vehicles?
So, why are new and used cars so hard to come by? The Australian car market is currently looking a bit lean for a few different reasons.
First is the matter of the global COVID-19 pandemic that’s been hampering supply chains and logistics since 2019. As one of the biggest suppliers for car parts globally, the impact of the pandemic on Chinese factory closures and forced lockdowns had a flow on effect that impacted auto manufacturers around the world. Due to the shortage of car parts, the supply chain was thrown off kilter, which ultimately limited the number of new cars hitting the Australian market.
Second, the automotive industry has experienced a number of raw materials shortages, restricting the availability of critical components needed to manufacture vehicles. From the semiconductor crisis to the rubber shortage, the limited stock of car parts combined with the impacts of the pandemic has caused even more issues for the auto supply chain leading to a shortage of both new and used cars.
Third and final, freight supply chain and shipping delays have made it difficult to import new vehicles into Australia further impacting supply. Being an isolated island continent sure has its perks but it can be a logistical nightmare for importing larger goods like cars which have to sail the high seas before hitting our shores. Freight companies often operate on a ‘just in time’ supply model, so when one part of the supply chain fails it has a domino effect that impacts the timing of the whole process.
All of these supply issues compounded with unanticipated demand for new cars in Australia are driving up the prices of new vehicles. Because of the surge in prices and lengthy delays to get a new car, many people are hanging onto their existing vehicles which is also stifling the supply of used cars in Australia.
Tips for buying a car during the shortage
Buying a new or used car during a supply shortage can be tricky to navigate, but here are a few tips to help you land a fresh set of wheels while the market’s tight:
- Be flexible: if you’re having trouble tracking down the car of your dreams, it could be a sign you need to compromise. If you’re willing to consider similar models from a different manufacturer you might have better luck getting the keys to that new ride sooner rather than later. If your heart is set on an exact colour or specific make or model then you’ll have to join the queue and wait it out until your new baby arrives.
- Look further afield: not having much luck finding your ideal new car close to home? It could be time to extend your search radius and be prepared to travel a bit further to check out a fresh set of wheels. If you have a specific make and model you’re after, you might be able to work with your local car dealer to locate the vehicle at another dealership further abroad or interstate and pay for delivery to have it transported locally.
- Consider a secondhand model: if you’re in the market for a new vehicle but it’s proving difficult to find, why not check out a used model from a reputable dealer instead? Although second hand cars are difficult to come by at the moment, it’s worth a shot if you can’t afford to wait for the newest model.
- Wait it out: if you’re not in a rush and you can afford to put your search for a new car on hold until production ramps up and prices stabilise, the new and used car market might return to pre-COVID supply and prices. While it’s difficult to say exactly how long the shortage will last, if you’re happy to hold off buying your next car for another 12-18 months it's likely the car market will be more favourable.
- Shop around: with a whole lot of demand and limited supply, dealers are less likely to be willing to negotiate on price. Instead of hunting for a competitive price, shop around for the best finance deals or try your luck finding an unbeatable trade-in offer for your old car that’ll go some way to recouping the costs.
The future of the new and used car market in Australia
You might be wondering when we can expect things to return to normal… That’s the million dollar question, but it’s a tough one to answer with any certainty. From the production line to freight and everything in between, there are so many moving parts that need to be perfectly in sync before the supply of vehicles to Australia returns to pre-COVID levels.
Manufacturers are predicting that the supply of new vehicles in Australia will start to return to normal around mid to late 2022, which should see a reduction in new and used car prices as more vehicles start hitting the market.
Don’t let fear of missing out get the better of you when hunting for a new or second hand car during the shortage. Make sure you do your research and buy from a reputable seller or risk being burnt. Whether you manage to land your dream car now or choose to wait it out, Youi is home to a range of car insurance offerings when you’re ready to switch or update your cover.