We are gonna need a bigger workshop!

Australia entering a new era of vehicle ownership as used car sales soar.

Demand for used cars in Australia soared by almost a third between January and December last year, suggesting there is opportunity ahead for workshops servicing the aftermarket.

Data analysis by the Australian Automotive Dealer Association (AADA) and Autograb of the auto industry’s 2023 sales found demand peaked in November, with 203,863 used cars sold (up 34.4% from January).

On the other side of the equation, the supply of used cars peaked at 320,203 units in July, then hovered around 310,000 units until a temporary dip in December.

“Improved supply chains have resolved new car shortages, fulfilling backlogged orders and increasing the availability of used cars on the market,” the AADA report states. That has also seen the prices on used cars come down by 11.6% for vehicles between two and four years old and 13.2% for those five to seven years old.

Experts say demand for used cars is booming thanks to the cost-of-living crisis, which is encouraging some motorists to either hold onto their cars longer or trade up to a used car instead of a new one. Analyst Namit Goel, from Ken Research, said the ratio of new to used cars sold “signifies the beginning of a new era in the pre-owned car market in Australia” and predicted double-digit compound annual growth as online platforms and other digital infrastructure make selling and buying used cars easier.

The Australian Automotive Aftermarket Association (AAAA) Chief Executive Officer Stuart Charity believes new car sales are about to hit a downturn and the age of the national fleet is going to get older. He told Drive Magazine in April: “It’s good for our industry, which will see that upswing if owners delay their car service. But if they do it for too long it’s going to turn into a repair rather than a service.”

If the current trend continues and the experts are right, aftermarket workshops will pick up a lot of extra servicing work—which bears out one of the findings we have seen in every State of the Nation survey we have conducted in recent years: Capricorn Members believe there will always be cars that need fixing! When we asked Members how confident they feel about their business’s future in 2023, 20% said extremely confident, 31% said very and 28% said moderately. The top reason for that confidence? The belief that business will continue to grow.

The AADA data found passenger cars accounted for almost 44% of used car sales, SUVs almost 37% and light commercial Utes just over 17%. By contrast, SUVs and Utes lead the new car market.

The supply and sales of used EVs (excluding plug-in hybrids) has nearly doubled, but their market share remains low, at 0.7%. Prices for used EVs have dropped 15.6% for cars less than two years old and 23.4% for those aged two to four years. This volatility may be due to the Fringe Benefits Tax exemption introduced in November 2022, uncertainty over battery health, and pricing competition among EV manufacturers. As such, it might take a while longer to properly gauge how these EV pricing trends will impact the aftermarket.