Are car prices about to finally hit the brakes?

As delays get shorter, demand for used cars slows. 

The price of used cars is finally showing some signs of softening but industry experts say it's too early to call time on the high cost of second-hand vehicles as supply pressures are tipped to persist this year.

Prices for pre-owned vehicles rose to almost 40 per cent above pre-covid levels at their peak as the pandemic caused significant shortages in microchips, which led new car demand to outstrip supply.

Prices have slowly started to fall as delays for new vehicles in WA declined 50 per cent in the past six months, with the average wait now 159 days, according to Price My Car.

But car industry experts say the wait for the most popular vehicles has blown out to 18 months as COVID cases in China rise after its reopening, which is slowing production. Shipping disruptions from the war in Ukraine also continues to impact car manufacturing.

“I don’t see any change for at least a year and I think probably quite a bit longer,” said car industry veteran John Hughes, pictured left.

“New car supply is not getting any easier. We still have got a nine to 12-month delay on just about every new car that’s been sold in the State at the moment.

“The market is still relatively buoyant.”

Supply issues easing for some models has caused a decrease in pre-owned vehicle prices for the seventh consecutive month with costs decreasing about five per cent in WA since its peak, according to Moody’s Analytics Used Vehicle Price Index.

CarsGuide’s latest data shows the 2022 models of the Mazda CX-3, Ford Ranger, Mitsubishi Triton, and Hyundai i30 are just some of the cars that have depreciated significantly.

Its price guide recommends the Mazda CX-3 be priced at a minimum of $18,200 compared with their guide suggesting $23,190 at the same time last year.

While that lowest price is yet to be reflected in listings, it shows there has been a fall in prices across the used car market.

Motor Trade Association WA chief executive Steve Moir said the next 12 months would not be easy to forecast given supply issues.

“Prices are certainly softening as some of the supply lines on newer vehicles become shorter,” he said.

“The really popular new cars we are still seeing a 12 to 18-month waitlist, so people that are looking to buy that sort of model as a recent used car will still be paying a premium.”

Waits for some models are ramping up, including the Hyundai Kona, pictured above, which went from 174 days in November to 180 in December, according to Price My Car’s latest data.

Hyundai wait times are now 23 per cent longer than they were three months ago, while Kia and Ford delays are 5 per cent and 2 per cent longer than last quarter.

Mr Moir, pictured right, said delays for some models were so long that manufacturers were now adding a disclaimer that prices may change when the car arrived.

“There could be price adjustments because of the length of time it’s taking to get the cars,” he said. SUVs have been the most in demand, making up 54,732 out of a total 105,905 new cars sold in WA in 2022, according to the Federal Chamber of Automotive Industries’ latest data.

Toyota has been the most popular manufacturer in the State, selling 27,556 vehicles last year followed by 8944 Mitsubishis sold and 7861 Mazdas.

Among the most sought-after new vehicles is the Toyota LandCruiser Prado and 300 Series with people willing to wait an average of 291 days, a 5 per cent decrease from three months ago.

The wait for a new Mazda has also improved with delays now 21 per cent shorter than last quarter. Despite early signs of some prices softening, they are still inflated for the most desired cars.

Currently the retail price for a 2023 Toyota LandCruiser 300 Series is between $89,990 to $138,790, while used car dealers are advertising demo models for up to $180,000.

Toyota Prados are seeing a similar trend with older models advertised at almost the same price as 2023 models.

The retail price on new models is $60,830 to $86,990, while a 2018 model with more than 64,000 on the odometer is advertised for $75,000.

Umesh Rhatee has been on the winning side of these unprecedented price hikes — looking to sell his 2019 Toyota LandCruiser Prado for close to the price of a brand new model.

Despite paying $67,500 for the vehicle, he has it listed on Gumtree for $75,000 and is confident it will sell.

“The dealer is offering me basically the same as what I bought it for. I thought if the dealer is paying me that surely I can sell it for more,” he said.

“The demand is too much and the supply is not there. “People don’t have patience so they are happy to pay $5000 to $10,000 extra on a car to get it right away rather than waiting.” He has already had success in the inflated market, selling his 2013 Audi for exactly what he bought it for.

“Near-new LandCruisers are selling above the manufacturer’s recommended retail price through used dealerships,” Mr Moir said.

“People who want to jump the line are prepared to pay a premium above what the retail selling price of a brand new car is.”

Nathan Aldonza is just one of many West Australians willing to pay top dollar for a used car.

In 2021, he spent just $3000 short of the price for a new Mazda CX-3 for a demo model.

“I was looking to order one but the minimum wait was 12 weeks and I needed a car as soon as possible,” he said.

“The wait was 12 weeks but wasn’t a set-it-in-stone timeline and could blow out.

“I paid $29,000 for it and the retail price was $32,000."

Mr Adonza was so desperate for a car he said he would have paid a premium price for a used car if necessary.

“The used car market was bonkers back then and still is.”