Interest rates

Rising interest rates and fuel prices could force 4×4 owners to sell, expert says

West Australians who have splashed out on four-wheel drives and caravans during the pandemic could be forced to sell amid rising interest rates and fuel prices, a motor industry expert says.

WA Motor Trade Association President Stephen Moir said while there was a chronic shortage of used vehicles driven by closed borders and interrupted supply chains, that could change in the coming months to as the cost of living increases.

“They actually bought these cars and caravans…because they didn’t spend their money on trips abroad,” he said.

Stephen Moir says more used vehicles will hit the market in the second half of 2022.(ABC News: Andrew O’Connor)

Mr Moir said fuel prices would also contribute to financial pressure.

“I saw someone with a late-model four-wheel-drive…put $209 worth of gas in their car,” he said.

“They could cost you 20% more in fuel.”

Unprecedented demand for new and used vehicles during the pandemic has led to a shortage, but Mr Moir said that will change when owners start selling.

“I expect the second half of this year you will see an increase in the level of inventory coming back into the market,” he said.

But Mr Moir said buyers should not expect a significant drop in prices.

“We’ve seen the value of used cars go up around 35% during the pandemic – will they go down 35%? I doubt it,” he said.

A campfire burns near where two four-wheel drive campers are parked.
Travelers swapped overseas travel for outback exploration while WA’s borders were closed.(ABC Kimberley: Erin Parke)

The backlog is unlikely to ease

A backlog of new vehicle orders has seen some customers wait more than a year for delivery and Mr Moir says there are no signs that will subside soon.

“Mainly because of things like the manufacturing disruption due to COVID, we have a global chip supply problem and now with the Ukraine crisis that could put additional pressure on some parts of the supply chain. ‘supply,’ he said.

Meanwhile, Pat Jenkin, a member of the WA Four-Wheel Driving Club, said the reopening of WA’s borders would see people opting for overseas trips over backcountry adventures.

“With the COVID pandemic and the inability to go anywhere overseas and interstate…it just meant everyone had to do something and they decided that four-wheeling and camping and caravanning was the way to go,” he said.

“The second-hand market is where a lot of people go and I think there will just be oversupply if everyone decides to go back to their pre-COVID lives and vacations abroad rather than ‘in Australia.”

He predicted that buyers who had paid more for a used 4×4 during the pandemic could suffer a loss on resale value if it meant they could afford to travel abroad.

“You don’t make money on cars normally, it’s a bit of a crazy world right now,” Mr Jenkin said.