The outlook for Australia's new and used car markets

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The 2015 Australian new car market is running in parallel with 2014. Sales to the end of May totalled 452,577, compared with 441,642 for the same period in 2014. On paper all looks rosy in the market, but looks can be deceiving.

The market is undergoing change, which is set to continue over the coming two-three years. At the heart of this change is the closure of the Ford, GM (Holden) and Toyota production plants following the Government’s decision to cut subsidies for the industry.

This will mean that once these plants have closed, all cars will be imported into the country and despite a current 5% import duty in place, the world’s auto makers all have importers and franchised dealer networks.

While Australia’s remaining new car production plants continue to build cars, the 5% import duty is likely to continue as it safeguards the many hundreds of jobs in the Australian car manufacturing sector.

But with less than a year to go until a General Election, how that import duty is set to change remains undecided. One option is to mirror New Zealand, which removed its car import duty completely.

Already Korean and Japanese brands are very dominant and their sales continue to grow, while some enterprising motorists are importing high value prestige cars privately rather than buying through a franchised dealer in a bid to save money.

Already used car dealers are importing thousands of Japanese used cars into the market. Like Australian cars, these are right-hand-drive and in addition, extremely cheap, although their quality and roadworthiness is regularly under scrutiny.

The market is flooded with cheap Japanese used cars, which is helping keep new car price inflation in check as well as keeping used car prices lower.

Keeping new car inflation in check is a positive for any government. If import duty is removed, new car prices are likely to remain constant, which is good news for Australian motorists. Prices might even start to fall, as the Chinese manufacturers are the next to eye up the opportunities to launch their value for money brands in the country.

Meanwhile the used vehicle and salvage remarketing companies continue to proactively use online remarketing more and more as they look to optimise residual values and look at selling a vehicle in situ, rather than having to move it hundreds and even thousands of miles to a physical auction.

Outright purchase fleets are also switching to online. Not for profit organisations like charities and Government bodies purchase vehicles outright to reduce their tax burden. These organisations therefore need help and support when it comes to disposal time, which is where online remarketing is coming into its own.

As the new and used car markets continue to evolve, so the further adoption of online remarketing will just be a small piece in the jigsaw of change that is modern day Australia.

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