Is it better to buy a new or used car in 2023?

The market for new and used cars in Australia is looking healthy. Sales of new cars in September 2022 were up 12% after rising 17% in August. After a post-Covid lull, stock levels and supply are picking up. Meanwhile, strong demand but low supply have already pushed prices of used cars to record highs. Is it better to buy a new or a used car? You decide.

Australians want SUVs and utes

Australians are snapping up new SUVs and utes. There were 4 utes in the September top 6 by sales, with the Hilux and Ranger taking 1st and 2nd place. In the top 10, there were 4 SUVs and only 2 passenger vehicles. One of these was Tesla Model Y, a fully electric car.

Sales of used cars have surged too, but lack of trade-ins or newer cars on the used market created a shortage. Prices of used cars went to record highs. Now Moody’s Analytics says prices for used vehicles could fall by 11% or more in 2023 because of interest rates and the higher cost of living. It could be a good time to buy.

Luckily, there are just as many benefits from buying new or used cars. It just depends on which benefits are valuable to you.

Benefits of buying used over new cars

There are benefits from buying used cars over new cars:

• Used cars usually cost less or you can get a better make and model for the price
• Sellers of used cars are usually more open to bargain
• Value depreciates more slowly – new cars lose about 40% of value in 3 years
• Well maintained and serviced used cars can be as reliable as newer ones
• Mileage may still be low, eg, demonstrator models
• Lower insurance (perhaps).

Too many people buy used cars without fully checking whether they are encumbered by debt, were previously written off or have some hidden fault.

Benefits of buying new rather than used cars

There are benefits from buying new cars over used cars:

• Manufacturer warranty lasts 3 to 5, even 7 years, or 60,000 to 100,000km
• Less likely to break down
• Lower ongoing costs because parts don’t need replacing
• Latest safety technologies, driver aids and infotainment features
• More fuel efficient
• You can choose specs, such as paint colour, upholstery options and engine
• That special new car smell.

If you’re trying to decide between a used or a new car, you may wonder about the cost of insurance.

Is it cheaper to fully insure a used car than a new car?

There is no easy answer to this question. The cost of comprehensive insurance depends on the driver as well as the vehicle. While a new car may have lots of desirable features, it costs insurers more to replace it. However, some features of the vehicle could help to bring the cost of comprehensive insurance down:

• Lower value
• Low performance and smaller engines
• 5-star safety record
• History of crashing less often
• Rarely stolen
• Cheaper to repair
• Easy to replace parts.

 Is CTP insurance cheaper for a used car than a new car?

The price of CTP insurance is not based on whether a car is used or new. However, vehicle age is a factor. Our table below shows how much year of manufacture affects greenslip prices for a 30-54 year old and a 23-26 year old driving a passenger car or ute.
 

As well as having more expensive green slips, older cars tend to crash more often. According to Australian Bureau of Statistics:

• 20% of vehicles were built before 2000 but are in 33% of crashes
• Over 30% of vehicles were built after 2011 but in only 13% of crashes.

The average age of a vehicle in Australia is 10.6 years. So while new cars are becoming safer, many people are still driving older vehicles.

Get a green slip for your new or used car

Use the greenslips.com.au Calculator to get the cheapest green slip prices for your new or used car.

The greenslips.com.au Calculator always asks for year of manufacture. It is important to state this correctly, otherwise your make and model may not show up. Remember, greenslip prices are based on type of vehicle and vehicle variant, as well as the age of the vehicle.

See the earlier version of this blog.

 
 
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