More people than ever are driving out of showrooms with a brand new model then ever before.
But why are people heading to the new car yard over used and even private buyers?
The latest figures released by the Federal Chamber of Automotive Industries (FCAI) reveal that Australians bought 90,424 cars in February, with Queenslanders putting 18,212 of those cars on the road. This was driven by strong SUV sales, which was the only segment to see a boost in sales.
So why did nearly 20,000 of us go and buy factory fresh 4WDs, rather than scope the classifieds? Well, thanks to some favourable circumstances, it’s never been a better time to buy a new car.
Trade agreements are usually very exciting for people who work in a particular industry, but not incredibly thrilling for customers affected. But the Japan-Australia Free Trade Agreement has one big effect for customers: cheaper cars.
Not only are cars from Japan cheaper thanks to favourable import conditions that lower costs for manufacturers – non-Japanese competitors are now lowering their own prices to stay competitive with cars from the land of the rising sun.
If you don’t see a price difference, have a look at the features list on the car. Manufacturers who benefit from these agreements may instead put more features in as a result of lower costs to beef up the value in their vehicles.
The finance report is never the most interesting part of the 5 o’clock news, but the simple maths is: a higher dollar is better for importers, while a lower dollar is better for exporters.
With the Australian dollar sitting relatively high in the global economy, brands are able to import more cars and Australians have a greater purchasing power.
With a high currency rate, it usually means that the Reserve Bank of Australia keeps interest rates low in order to stimulate growth in the economy. Since the global financial crisis at the end of the first decade of the 2000s, interest rates have been kept at record lows in order to get people to spend more of their disposable income and keep businesses in Australia going.
This has a knock on effect from everything from home loans to car repayments. For example, when the interest rate on your home loan is lower, you can put more money to your car repayment. When you can put more towards a car repayment, you can borrow more. And with greater borrowing power, you may be able to afford a bigger or better model, or a few more options on your car.
Since destructive weather started to hit more frequently, insurance companies have been paying out claims, which has spurred people to buy new cars with their deposits rather than go for something used.
This has also created a dual problem: first, weather events wipe out a large percentage of used car stock, plus it also damaged cars on the road which could have potentially been traded in.
If you missed out on any of the sudden hail sales, or wanted to pick up a car that you know is unaffected by any damage; this is the perfect time for you. Dealerships are now paying higher prices for used cars that they can actually sell, giving you even more bargaining power.
If you can take advantage of all four of these when trading in your car and stepping up to a brand new model – you’ll be ahead of most buyers in the marketplace.
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