The COVID-19 pandemic affected the economy in ways we haven’t seen since the 1930s, not least of which was its effect on the car industry.
New car sales throughout 2020 were volatile, experiencing some of their largest monthly drops on record, according to the Federal Chamber of Automotive Industries (FCAI). However, coinciding with lockdowns ending, things started to turn around later in the year. In 2021, things are looking brighter.
The months of January, February, and March 2021 all recorded an uptick in sales compared to the corresponding months the year prior, albeit based off very low volumes. That trend looks set to continue. Used cars, too, are seeing their time in the sun - especially SUVs and utes. Moody’s Analytics has previously estimated that used utes and SUVs are fetching around 40% more on the secondhand market than they were in the year prior. Anecdotally, some used models are not going for much less than the new price.
So, where does that leave the average motorist looking to upgrade their vehicle in 2021?
The three main questions on most car buyers' lips are: are there cars available, how long will it take to deliver the car, and is it worth getting a car loan?
The short answer to this is yes. Dealerships and manufacturers have managed to navigate through COVID-19 with relatively minor disruptions compared to other industries. Many of the best-selling mainstream cars have had no issue landing on Australian shores. Think the Toyota Hilux, Ford Ranger, Toyota Corolla, Hyundai i30, Mitsubishi Triton, Toyota RAV4, Mazda CX-5 and others.
However, you may find it more difficult to find the exact car and trim level you’re after in some respects. For example, if you want X car in a popular colour with a popular trim level, there may be more demand in that category. You may need to wait until your local dealer has inventory, or be prepared to travel for the right car. The main message here is, be willing to be flexible. While mainstream makes and models are relatively accessible, in-demand enthusiast cars such as the Toyota Supra or V8 Toyota Landcruiser may be harder to come by. In some cases used prices for these types of cars are higher than new prices because the demand is so great!
Once the car has been delivered by the manufacturer to their dealership networks, things are largely business-as-usual. Where brands have run into hiccups is in the pre-ordering process for more in-demand cars. This means dealers are putting buyers on waitlists without actually having stock yet. Certain models, for instance, have been delayed in delivery altogether, such as the all-new Toyota Landcruiser, which has seemingly been pushed back a few times now.
With interest rates at record lows, now could be a good time to find a competitive car loan. The Reserve Bank’s cash rate sits at 0.10%, and the Governor has said a few times now this will likely not change until 2024. However, some lenders' funding costs have increased for a variety of reasons. What this means is that it might not be out of the question for car loan rates to rise in the next few years.
This is where a fixed car loan could come in handy, as you have certainty of repayments for the entirety of the loan term. This means you know exactly what you’re paying every week, fortnight, or month, so you can better work it in with the household budget.
If you’re looking to upgrade your vehicle, speak with one of our lending specialists today to get pre-approved for a car loan before you search for your new set of wheels.
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