The wait for new or used cars is about to get longer – and prices are set to get even higher – following the wipeout of close to 20,000 motor vehicles during the recent floods in Queensland and NSW, industry experts have warned.
Most new cars already have a waiting time of three to 12 months amid production restrictions and shipping delays.
The additional pressure of finding replacements for 20,000 motor vehicles in the coming months will make the bottlenecks worse and push up prices even further, say automotive industry analysts.
Insurance companies have so far received at least 9700 claims for written-off vehicles in Queensland due to flood damage, while the toll in NSW currently sits at 8300, according to data supplied to Drive by the Insurance Council of Australia.
However, industry analysts believe the true figure could be closer to 30,000 once all claims are lodged in the coming weeks – and uninsured cars are added to the mix.
While it is difficult to precisely calculate how many uninsured vehicles have been written off, dealers say they have already fielded a significant number of enquiries from owners of insured and uninsured cars.
“About two out of three enquiries we are receiving about replacement vehicles are from people who are insured, the remainder are people on tighter budgets trying to find replacements for uninsured vehicles,” said a major metropolitan dealer who sells a number of Top 10 and luxury brands.
“The problem is a lot of the used cars in the $5000 to $10,000 price bracket got snapped up during COVID when frontline workers were trying to stay off public transport. There is still a chronic shortage of good, affordable used cars.”
Automotive industry experts have warned used-car buyers to be on the lookout for flood-damaged vehicles that have been unscrupulously repaired.
“If an insured car is written-off, it goes on a national computer system and cannot be re-registered ,” said the veteran multi-franchise car dealer.“But the risk with uninsured flood-damaged cars is that, if someone is desperate and wants to patch it up and sell it, you really could end up with a lemon.”
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Above: A flood damaged left-hand-drive Ford Fiesta in Europe. Photo: iStock.
The showroom owner advised that anyone buying a used car privately should get a pre-purchase vehicle inspection by an independent mechanic or one of the motoring clubs such as the NRMA, RACV, RACQ, or RAA.
“Now more than ever, right after a flood, is the time to be extra cautious about buying a used car,” he told Drive. “If someone has the skills to clean the vehicle properly, you would have no idea if you’re buying a flood-damaged car or not. They catch out the best of them.”While many used car values have increased by between 10 and 30 per cent – depending on the vehicle – over the past two years during the pandemic, finance companies and insurers are starting to apply the brakes.
Finance companies are concerned a lot of used cars are over-valued and therefore are a high risk to lend against – and insurance companies don’t always agree with the higher values customers are trying to insure their vehicles for.
Meantime, the price of new cars across all types and sizes continue to rise on a weekly basis, as car giants take advantage of strong demand and limited supply.
“We were hoping to return to normal with car deliveries by the middle of this year, but the (Russia-Ukraine conflict) has impacted many parts suppliers, and it now looks like there will be extended delays for new motor vehicles until at least next year,” said another major metropolitan new-car dealer, also speaking on condition of anonymity because they are not authorised to speak on behalf of the brands they sell.
“When you add demand for another 20,000 to 30,000 cars into the mix, these chronic delays unfortunately are going to get worse before they get better,” he told Drive.
New-car delays were originally impacted by parts shortages, employee absenteeism during COVID outbreaks, and were then compounded by subsequent shipping delays.
Now, as Drive recently reported, the Russia-Ukraine conflict is also likely to have an impact on the car industry, as both countries account for a significant proportion of the precious metals required to make catalytic converters for petrol cars, and battery packs for electric cars.Ukraine also produces 70 per cent of the neon gas used to make semiconductors, which are critical to the production of computers, smartphones, and modern cars.
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