Manheim-Australian-Market-Report-Q3-2016 - Page 19

Australian Market Report Manheim Insights Q3 Trends for Age, Kilometres and Sale Prices A car sold today at Manheim will on average have travelled almost 46,000km more than a car sold in our lanes 10 years ago. F rom 2011 to 2014, the economic outlook improved and new vehicles sales reached record heights. Private buyers were trading in their cars and business fleets were being refreshed in large numbers. The impact of the extension of vehicle leases and delaying the purchase of new vehicles could finally be felt in the used vehicle market place. Vehicles sold in 2014 were on average 61 per cent older than those sold in 2006. They had 43 per cent higher kilometres. As a result of the increased age and distances travelled, buyers were making new assessments of vehicle’s values. Despite the average age of vehicles rising a full two years and the average kilometres increasing by almost 30,000 compared to vehicles in 2006, buyers were still paying 80 per cent of the prices paid 8 years ago. A car sold today at Manheim will on average have travelled almost 46,000km more than a car sold in our lanes 10 years ago. Like our comparison in early 2015, despite the fact there have been significant rises in the average age and kilometres of the vehicles, prices paid by buyers have been less variable. On average buyers are still paying 73 per cent of the value of average vehicle prices in 2006. While this might not makes sense at first glance, there is another factor in play here; market demand. Picture this. If most of the cars on offer all have similar (higher) ages and comparable (increased) kilometres on the clock, then buyers are left to compete for vehicles with similar attributes. Looking at the results in 2016, the trends for age, kilometres and price have continued. Vehicles sold in 2016 are now on average, almost twice as old as those sold in 2006. The general nature of the vehicles being offered has changed over the past 10 years, which means cars with higher ages and higher kilometres are the norm. To purchase these cars buyers are competing with each other, which has always been the case, which ensures pricing is the one variable which is more constant than the others. Their average age is up 97 per cent compared to 10 years ago. It is a similar story for average kilometres, with an increase of 69 per cent for vehicles sold in 2016 compared to 2006. So while the relationship between the variables may seem obvious, interpreting these results with a wider economic and industry perspective can shed some light on the values over time. More importantly they can help us understand the flow on effects of today’s fleet management decisions and new vehicle sale have on future remarketing results. While it has taken 10 years for the average age to double, in that time average kilometres have risen almost 70 per cent while prices have fallen only 27 per cent. It will be very interesting to see how the trends continue in 2017 and beyond. Economic comparison of vehicles sold at Manheim between 2006 and 2016 19