The story behind WA's car shortage

15 April, 2021   By: Alex Forrest

Any one of those factors alone – travel restrictions, pre-existing supply problems, low interest rates, semiconductor shortages and the end of production for popular models like the Toyota Landcruiser 200 Series – could each have had a big impact on the market alone.

But as it happened, they all more or less coincided.

The result was unprecedented changes to the new and used car markets in Australia including limited supply and long waits for new car deliveries, inflated prices for used cars and in some instances, certain features missing on some cars.

RELATED: How COVID impacted the supply of cars and car parts in 2020 »

More recently, vehicle production has also been hampered by shortages of semiconductors, which are essential in the manufacture of consumer electronic goods such as computers, monitors, TVs and gaming consoles – and cars.

As more people worldwide increased their work and schooling from home, demand for these items increased. Accordingly, demand for semiconductors to make these products also increased.

This in turn placed greater demand on the supply of semiconductors for use in vehicle electronics.

For consumers, that’s meant some new car models have been very hard to source. Where those cars are available, they’ve often come with a long wait and a higher price.

These drastic changes in the new car market have generated flow-on effects for the used car market.

Dealers have been contacting recent customers offering to buy back their cars at significantly higher prices than the customer paid several years before, knowing they’d then need to charge even more to make a profit.

With some buyers willing to pay these high prices for used cars, there was little to discourage dealers and private sellers from asking for inflated amounts. For some, it was essential given the state of the market.

Other dealer networks have been moving stock from their regional dealerships and into Perth, where demand is higher for certain models and therefore higher prices are possible.

A silver lining

It hasn’t been all bad news for consumers.

For those looking to sell a late model vehicle that doesn't need to be replaced, it's possible to sell it for even more than it was originally purchased for, even though it would have more kilometres on the clock.

Like the housing market though, buying back into a heated market will cost you.

If you decide to just hang on to your car, chances are its depreciation will at least have been delayed, so there could be a benefit.

First car buyer? Be patient

Among the biggest challenges associated with inflated car prices is ensuring those who are looking to buy a car at entry level pricing are still able to afford one that is safe and reliable.

This is especially important where those buyers are novice drivers who may be more likely than most to require the safety features offered by a newer vehicle.

For example, at a price point of $10,000, the number of safe and reliable cars available in March 2021 were far fewer than those of September 2020.

The best advice here is, if you can, to wait until the market stabilises to the point where you can get more for your money. In the meantime, keep your eyes peeled for that chance bargain.

What the car makers say

In the first three months of 2021, new car sales figures provided by the Federal Chamber of Automotive Industries indicated that sales of Mazda, Toyota, Hyundai, Kia, MG, Isuzu Ute, Audi, BMW and Mercedes-Benz vehicles grew significantly compared to the same three months in 2020.

A Toyota Australia spokesperson says the organisation was experiencing a global increase in demand across high volume models, which has stretched out waiting times.

“As demand has increased, some key components also found in technology such as computers have also experienced supply demand increases due to COVID-19, affecting global production requests.

“Although our plants are increasing capacity, we are anticipating that wait times for high-demand models, service parts and some accessories may be longer than usual in the coming months.

“For example, Landcruiser 70 series and Hilux 4x4 have longer lead-times given their current high demand,” the Toyota spokesperson said.

“RAV4 petrol variants currently have a wait time of approximately three months with wait times for hybrid models anywhere from four-to-six months, depending on the variant.”

Mercedes-Benz Cars Australia head of media relations Jerry Stamoulis said there was strong demand for new models across the Mercedes-Benz compact car range and across all SUV models.

But he said there had been some delays in the medium-sized C-Class cars, the GLA small SUVs and the A-Class small car models due to the global shortage of semi-conductors.

Kia Australia spokesperson Alyson MacDonald says the Kia range is, to varying degrees, feeling the effects of COVID on a global level with strain on supply chains and manufacturing.

“This adds pressure to meet the demands of Australian customers at a time of unprecedented popularity for Kia in Australia, particularly when it comes to our recently launched new models such as Sorento, Carnival and Stonic,” MacDonald said.

In late 2020, some specific elements of the well-regarded Kia Carnival people mover were affected by the pandemic, but MacDonald said no other Kia vehicles were affected.

“Only Carnival was impacted and the missing features [digital cluster including blind spot monitor and rain sensing auto wipers] will be available from the model year 2022 production,” she said.

MacDonald said the Australian supply of Kia vehicles was anticipated to catch up with demand during the fourth quarter of this year.

What other car models have been scarce?

The flow-on effects of disruptions to car production around the world continued to be felt well into 2021, with many car models still in short supply.

There have been signs of recovery and normalisation but delays for other car cars are still an issue.

Here are just some of the specific models which have been in short supply in WA:

Spotlight: The final Landcruiser 200 Series

The rush for Toyota Landcruisers was not solely the result of increased demand driven by changed holiday choices, resulting from the pandemic, with more people taking road trips.

After 14 years, production of the V8-powered Toyota Landcruiser 200 Series was rumoured to end in the first half of 2021, making it one of the longest running Landcruiser models. Anticipation of the end of the hugely popular 200 Series sent prices skyward.

Further pushing up prices of the outgoing Landcruiser were rumours that its replacement could have a smaller, but more efficient six-cylinder engine in place of the revered V8.

In WA, even though overall car sales for 2020 were down by 2.7 per cent compared to 2019, sales of the Landcruiser 200 Series were up by 15 per cent. Demand for the big off-roader continued well into 2021, squeezing supply.

Motor Trade Association of Western Australia chief executive Stephen Moir said that for several months, sales of Landcruisers exceeded sales of Corollas - one of Australia's most popular cars.

“When we consider the price difference between these cars, that is extraordinary,” he said.

In March, examples of the top-of-the-range Landcruiser Sahara model were advertised in WA for more than $180,000, which is $44,000 more than the standard drive away price for the same model.

By the time you read this, we should know the pricing for the new 300 Series.

Buying a car in WA

Demand for new and used cars has been booming for more than a year, according to the Motor Trade Association of Western Australia, which represents the motor industry in WA across new and used car sales, vehicle servicing and repairs and the caravan industry.

“In March 2020, the industry, like most industries, was expecting the worst,” Moir says.

“There was a drop in activity, particularly during the initial lockdown, which lasted for about four weeks and then the roof lifted with unprecedented foot traffic through dealerships.

"The public wanted to avoid using public transport and started buying second and third cars for the household.”

He said the buying pattern was spread across all model variants but favoured the used car sector the most.

“As it became clear that the pandemic was with us for some time and that travel internationally was off the schedule, consumers started to buy heavily into recreational vehicles,” he said. “Sales of large SUVs and caravans were at an all-time high.”

Moir said caravan dealers have experienced record sales, with most vans ordered in early 2021 not expected to be delivered for 12 months, such is the backlog of orders.

He said the search by car dealers for used car stock to fill their yards has been challenging.

“It's now common for consumers listing their car for sale to be approached by dealers who are paying full or above asking price just to secure the vehicle,” Moir said. “This is the primary reason for the increase in prices for used vehicles by up to 35 per cent.”

“We're getting regular reports about individuals selling their used vehicle for close to what it cost when new which is quite amazing. WA has seen a substantial increase in the amount of stock being imported from the east coast to meet demand."

Increases in the cost of vehicles is no doubt an extra expense no one needs. However, these inflated prices are unlikely to be around forever and have already shown signs of subsiding.

Plus, one of the great positives arising from the upheaval of COVID has been that many Western Australians have been getting out and discovering the wonders of their state, helping local businesses while being reminded of how fortunate we really are.

Last updated: April 2021