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Used Car Prices

There is an interesting article in The Age about the effect of petrol prices on the poorer people in Melbourne [1].

The article claims that people are unable to sell large old cars and buy smaller cars. To investigate that claim I did a price search on Ford Falcons and Holden Commodores on the web site www.drive.com.au . The Ford Falcon and Holden Commodore were for a long time the two leading marques of cars sold in Australia – both of them large cars. It seems that if I wanted to buy a Falcon that is less than 20 years old with an engine of 4.0L (or bigger) then I would have many choices available with list prices under $2500, including some cars in that price range which are as little as 10 years old (the average age of a car that’s registered for use in Australia). For Commodores there seems to be less choice, there are a few of them with 4L engines that are just over 10 years old being advertised for just under $5000 and a significant number being advertised in the $5,000 to $7,500 range. I don’t know whether the increased asking price for Commodores is due to greater optimism by the owners or a greater demand. One thing that we have to keep in mind is that due to the low price of advertising on the web site and the duration of the advert (which permits changing the price at any time) the sensible strategy is to start the advert with an optimistic price, and then gradually drop the price if there is little interest by the buyers.

There are also some Falcons on auction on Ebay that are going fairly cheaply, one example is less than $6000 for a 2000 Falcon with only a few minutes to go.

The HSV (Holden Special Vehicles) cars are listed on Drive as a different make on Drive (it’s just Holden’s range of faster vehicles), and surprisingly their prices are quite strong. There is only one vehicle on offer for less than $5000, and only a few for less than $10,000.

Now when it comes to buying a small car, on ebay there are a number of Toyota Corollas on sale, two 1997 models are on sale for just under $9,000 and just under $10,000. It seems that you could sell a 2000 model Ford Falcon on ebay and not receive enough money to buy a 1997 Toyota Corolla!

For the Corollas advertised on Drive the majority of them seem to be advertised for around $15,000, but the volume on sale is great enough that there is a significant minority advertised for lower prices. There are 173 Corollas advertised for between $2,500 and $5,000 it might be possible to find one of those that has no significant problems. So it seems that ebay is not the place to buy a Corolla!

So it seems that the main premise of the article (that you can’t sell a second-hand large car and buy a small car) is correct. If you were to sell a 1990′s Falcon or Commodore and buy a Corolla (which cost about half as much as a high-end Falcon or Commodore when new) of the same age then you would be lucky to get more than half the Corolla purchase price. Then of course there’s a 4% “stamp duty” tax to pay and the risk that a second-hand car you buy might have some hidden problem (the cheaper cars are unlikely to have been well serviced).

4 comments to Used Car Prices

  • Tim

    Perhaps it would be fairer to compare selling a larger Toyota to move to a smaller Toyota. With the tremendous quality reputation of Toyotas, I assume there is less decline in price than for Holdens.
    However, I suppose the point of the article is what can the average “working family” do.
    It’s too bad the article didn’t mention the 10% tariff on imported cars in Australia, justified to reduce the competition on locally-produced cars. Government policy asks car buyers to pay more in order to protect profits and jobs in Australia. The mix of imported cars is different to the mix of domestically produced cars. It is very difficult to buy a 4 cylinder version of the two dominant domestically cars, the Commodore and the Falcon. In fact, I think it is impossible. The 10% tariff increases the price of foreign small cars to protect the production of domestic large cars (a crude approximation, but more true than not).

  • etbe

    Tim: 20 years ago a “larger Toyota” was not a really popular car. It’s only in the last few years that the Camry marque has been fighting with Falcon and Commodore for the highest sales in the “family car” market. Also AFAIK there has never been a V8 Camry (at least not a stock one from Toyota ;).

    Also my recollection was that Toyota didn’t have a quality reputation 20 years ago. In fact in the 80′s Japanese products were widely regarded as being inferior. Whether the recent reputation of Japanese products for being high quality extended to older products is something that I’m not sure of.

    As for the 10% tariff, it’s much better to prevent tariffs via taxes than subsidies. The Australian government gives billions of dollars to foreign car companies as a form of dole payment to Australian workers.

  • Tim

    I should have put it differently: someone trading a Commodore to a Corolla is getting more than lower fuel bills; they also get lower repair & maintenance costs.

  • Zonky

    Regardless of Toyota’s reputation 20 years ago, the idea that Ford Australia & or Holden have a quality reputation then or now is hilarious!