Demand for some sectors of the used-vehicle market has “fallen off a cliff”, according to a leading evaluator, while demand for fit-for-purpose vehicles ranging from “bubble hatches” to the workhorse LandCruiser of Toyota, remains burning.
- Vehicle auctioneer says practicality, rather than status, now drives buying decisions
- A golden time in agriculture contributes to the huge demand for agricultural utilities and equipment, as well as the instant write-off of assets of $ 150,000
- LandCruisers in particular require much more used than new
Production and shipping delays related to COVID-19 have created unprecedented demand in the used vehicle market.
But auctioneer and appraiser Simon Cotter said with rising interest rates there was now a duality in the vehicle market, with demand for luxury vehicles collapsing while pack animals and budget options continued to sell near or even above retail prices.
“Our sale last week was the first sale since the COVID outbreak where, with some products, the lack of interest really showed on the auction floor,” he said.
“It’s become extraordinarily product-specific.
Mr Cotter said practicality, rather than status, now dictated people’s purchasing decisions.
“I think the status symbol for vehicles has stopped and people are buying vehicles based on their needs,” he said.
“Toy cars, bubble hatches and the like, you have a college student who needs a car. These types of cars are very strong, we almost hit retail prices under the hammer.
“Yet you could offer an equivalent European car, a Volkswagen Polo for example, and you won’t get an offer.”
Always cruising towards a profit
Mr Cotter spoke with the ABC last September about the explosion in value of LandCruisers in particular and reiterated that the trend is not slowing.
“If anything, their value has gone up more,” he said.
“For example, we’re selling 2022 GXL double cabs with a base tray and no fruit, so no bull bars, etc., and people are paying $115,000 to $120,000 to get them.
“Recommended retail price is around $86,000 on the road.”
Mr. Cotter said golden weather for many parts of the agricultural sector was contributing to the demand for LandCruisers, as well as the instant write-off of assets of $150,000 from the federal government.
“It’s an extraordinary situation we find ourselves in,” he said.
“The same goes for trucks. Kenworth has particular models [where there’s] a two-year wait.
But Mr Cotter said it was an unsustainable trend which he said would come to an abrupt end.
“It’s a concern. I still remember as an auctioneer and appraiser in the 1990s with the ‘recession we had to have’ from Keating, we had this period of bizarre consumer demand and then it went down off a cliff,” he said.
“Nothing happened for six months, then the floodgates opened and we were busy foreclosures and auctioning off houses where the banks had moved into.
“It was a horrible time and I fear we are facing a similar situation.”