Do you consider your car an investment?
The pandemic certainly created havoc with supply chains in all sectors of business, but things are slowly returning to pre-pandemic trends.
The demand for, and high prices that have been paid for pre-owned cars, is leveling out.
For many analysts, there is no surprise in this situation. Stock levels of new vehicles have increased and with an oversupply of value-for-money brands, buyers once again see more value in buying new rather than pre-owned.
Cars are, according to accountants, a depreciating asset.
Car pricing experts, getWorth, give some insight into the state of the used car market.
“Interest rate increases, fuel price increases and other living cost increases have reduced affordability.”
getWorth’s sophisticated pricing tools are based on live market data. It has developed algorithms to separate the effects of mileage and time.
“This allows us to compare apples with apples,” explains getWorth chief financial officer, Colin Morgan. “For example, we would compare the price of a 2018 2.8 diesel Fortuner automatic with 60 000km, a year ago with the same car at 60 000km today, even though the 2018 models actually in the market, might have added 10 000km to 20 000km.
“Only now are like-for-like price levels returning to near their pre-Covid levels” says Morgan.
“That doesn’t mean your car is worth the same today as it was when Covid hit. You would have been adding mileage, which adds another layer of depreciation.
“The return to the old price trends does have implications for consumers,” cautions Morgan.
The unusual market also encouraged scalping and flipping. However, those days are now over and car buyers need to be careful that they are buying at the right price and financing their vehicles in a responsible manner.
“It’s turning into a buyer’s market,” he concludes.
“It is a good time for those updating or upgrading their cars, as there are attractive deals available”.
Source: getWorth
