Buying A Car Before EOFY
As the end of the financial year (EOFY) approaches, it is time to think about finances and investments. One often-overlooked opportunity is buying a car before EOFY. Here, we’ll explore the benefits of buying a car before 30 June in Australia.
Current Car Market in Australia
First, let’s look at the current car market in Australia to better understand what the car-buying market looks like. In 2023 new car sales in Australia have been on the rise, which is a positive sign for the industry and for those looking to buy.
April 2023 New Car Sales (VFACTS)
- April 2023 saw 82,137 new vehicle sales, as reported by VFACTS – an increase of 1,072 vehicle sales or 1.3% against April 2022 (81,065).
- Passenger Vehicle sales are down by 253 vehicle sales (-1.6%) over the same month last year, with SUV’s up by 3,661 vehicle sales (8.6%).
- EVs were up 214% this year; conversely, hybrid and diesel vehicle sales decreased in April 2023 (-19%) and (-9%).
- Toyota was the market leader in April, followed by Mazda and Kia. Toyota led Mazda with a margin of 5,103 vehicle sales and 6.2 market share points.
These numbers show an improvement. However, due to the effects of the pandemic, new car stock shortages and time delays continue to cause problems for car buyers. Most of the shortages stem back to the reduced global supply of semiconductors, which has affected the production of cars in Australia and worldwide. These issues have increased demand and limited supply, increasing prices for new vehicles and delivery wait times.
The used car market in Australia also felt the effects of the pandemic, with used car prices hitting record highs. The market has cooled since the peak, which saw a growth in prices of 29.8 per cent (year-on-year) recorded in June 2022. (Source: Carsales) However, our experience and those of Moody’s Analytics suggest that average used vehicle prices will continue to fall from their height in May 2022.
Although prices have come down 12.5 per cent since their all-time peak in May 2022, they are still significantly high when comparing with the pre-pandemic period, said Moody’s Analytics associate economist Catarina Noro.
Benefits of Buying a Car Before the End of the Financial Year
Buying a car before the end of the financial year can offer many benefits.
- It can be a tax-effective investment for small business owners. The Australian government offers tax deductions and incentives for businesses that purchase assets, including vehicles, before the end of the financial year. A car purchased before EOFY can reduce your taxable income and increase your cash flow.
- Buying a car before the EOFY can help you to take advantage of current market conditions. As mentioned, the current car market is facing a shortage of supply and high demand, which is driving up prices. By purchasing a car before the end of the financial year, you can secure a better deal or negotiate a lower price, as dealerships are more willing to offer discounts to meet their sales targets.
- Buying a car before the EOFY can also help you avoid the announced price hikes for new vehicles in Australia. The price rises relate to the ongoing semiconductor shortage, increasing cost of components, labour shortages and port delays. In addition, the availability of quality used cars remains high compared to pre-pandemic conditions. By purchasing a vehicle before the end of the financial year, you can avoid these price hikes and potentially save yourself thousands of dollars.
Predicted Trends for the Car Market in Australia
Looking ahead, most analysts predict that the new car market in Australia will continue to face challenges, primarily due to the semiconductor shortage. The shortages will result in longer wait times for new cars and higher prices. In addition, the used car market will remain strong, with high demand and limited supply maintaining above pre-pandemic prices.
In addition, as the pandemic continues to impact how we live and work, there are changes in the types of cars in demand. For example, the need for electric vehicles has increased by 214% this year as people become more environmentally conscious and seek to reduce their carbon footprint.
In conclusion, buying a car before the end of the financial year in Australia can offer many benefits, including tax deductions, taking advantage of current market conditions, and avoiding predicted price hikes. With the current car market facing challenges due to the pandemic and semiconductor shortage, now may be the ideal time to purchase and secure a great deal!
Let us know if we can help you source and negotiate a new or used car before the end of the Financial Year! To learn more about the benefits of our service or see what our customers believe, read our Testimonials