The prices of new and used vehicles have reached their lowest levels in a decade and analysts predict they could fall even further later this year, thanks to the Australian dollar.
The Toyota Corolla has the same $19,990 starting price today as it did 20 years ago, despite the new model being significantly safer, more economical and better equipped.
If the price had kept up with inflation (66% over the past 20 years, according to the Reserve Bank of Australia), today’s Toyota Corolla would cost from $33,300. Meanwhile new-car affordability has hit a 38-year high due to wages growth and record-low interest rates.
Last week, Honda revealed their 2014 Honda Jazz would cost under $15,000 manufacturer’s list price.
“We’re one of the lucky countries across the advanced world that have enjoyed real wage gains over the past decade,” CommSec economist Savanth Sebastian told news.com.au
“We’re earning more money than ever before, interest rates are at record lows, and new cars are cheaper because of the sustained strength of the Australian dollar.”
Commsec figures estimate it now takes someone earning the national average wage 25.9 weeks to buy a large family car compared to 31.3 weeks three years ago and 37 weeks a decade ago. Yet new-car prices could fall even further towards the end of the year if the exchange rate improves.
“We expect the Australian dollar to lift over the next six to nine months,” says Sebastian. “So we’re likely to see even bigger discounts.”
The downside to cheaper prices is that anyone wanting to trade-in their used car for a new one may be in for shock, as the value of second-hand vehicles has also hit record lows.
“There is definitely a knock-on effect,” says Nick Adamidis from Glass’s Information Services, which monitors used car values.
“New-car affordability is extraordinary and car companies are adding more and more equipment even as prices get lower. But it means the value of used cars takes a hit because they are suddenly less appealing — they don’t have as many gadgets — and more people buying new cars means not as many are buying used,” Adamidis adds.
“Used car prices are the lowest they’ve been in 10 years and prices are expected to continue to fall,” he concluded.
Small cars
Ford Focus (pictured)
Australia: $24,590
UK: $32,029 (£17,650)
USA: $22,804 ($US21,225)
Mazda3
Australia: $22,490
UK: $33,562 (£18,495)
USA: $24,925 ($US23,199)
Toyota Corolla
Australia: $22,240
UK: $34,470 (£18,995)
USA: $21,539 ($US20,048)
Family SUVs
Mazda CX-5
Australia: $29,880
UK: $39,188 (£21,595)
USA: $28,084 ($US26,149)
Ford Kuga
Australia: $31,490
UK: $45,657 (£25,160)
USA: $25,997 ($US24,206)
Toyota RAV4
Australia: $31,190
UK: $40,821 (£22,495)
USA: $28,631 (US$26,659)
Luxury cars
BMW 320i
Australia: $60,500
UK: $55,003 (£30,310)
USA: $48,100 ($US44,770)
Mercedes-Benz C200
Australia: $60,900
UK: $59,286 (£32,670)
USA: $59,388 ($US55,297)
Range Rover Evoque
Australia: $49,995
UK: $52,998 (£29,205)
USA: $50,682 ($US47,190)
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