By Mark Biggart, Flare Cars
I’ve worked in the automotive industry for almost 20 years, and I’ve never experienced what’s happening in the used car market right now. I just sold my two-year-old hatchback for a $1,000 profit — that’s $1,000 *more* than what I paid for it just two years ago. A friend bought a new Mazda CX5 three years ago, drove it for 30,000 kms, and just sold it for only $4,000 less than what he paid.
Think about this for a second. The unwritten rules for car ownership dictate that a car will dramatically depreciate in value, from the moment you pick up the keys. So there’s probably never been a better time to sell.
So, what’s happening in the used car market, and why?
Market values for popular used vehicle models are up by 30% compared to B.C. (before COVID).
Why is this happening? Well, mainly due to COVID-19. For most of 2020, new car production and sales were severely impacted by the pandemic, and as a result, fewer cars were traded in, breaking the demand and supply balance in the used market.
Additionally, you may have heard about the global shortage of superconductor chips required for vehicle engines and electronics. This is further restricting the new car supply, and forcing people to buy used cars as an alternative option.
What does this mean for me?
While this isn’t great news for anyone in the market to buy a second-hand car, for those who own a car, whether it’s outright or financed, now could be a great time to realise its value.
One of my clients, Cam, was recently tossing up whether to re-lease his 3-years-old Mazda CX5 with $17,000 owing, or sell it and get a new car. He did a quick research on some car trading websites and was surprised to find out that the 50,000kms vehicle was worth much more than he had imagined. He ended up selling it for $33,000, only $2000 less than the original purchase price when he first leased it, meaning he walked away with an additional $16,000 cash tax-free in his bank account. What’s better is that he gets to lease a brand new CX5 all over again – a black one because his wife got to pick the colour this time!
Through the novated leasing program offered by Flare Cars, you could also unlock significant savings on your car and there are two ways we can help:
- Lease a new car. You can sell or trade in your current car (arrange your own, or we can help!), release the cash and lease a new car for an exciting upgrade. New car prices have not increased in line with used ones, and we can still get you great fleet discounts through our national dealership network, plus saving 10% GST on purchase price upfront.
- Sale and leaseback. If you’d rather keep your current car, you can do a sale and leaseback to pocket any equity or capital gain tax-free, and finance the remaining value of your car through a novated lease arrangement. This option works well whether you have existing finance on your car or own it outright.
Additionally, both options will save you thousands in running costs, GST and income tax over the life of the lease.
Sounds great! How do I get started?
Reach out to us for an obligation-free consultation so we can get an understanding of your current situation, and run an initial quote on the car you want to lease – whether it’s new, used or the car you already drive.
Flare Car is exclusively available to you as an employee benefit at your workplace. If you’re not sure whether this program is offered by your employer, get in touch and we can help you find out.
Information provided in this article is of a general nature only and we have not taken your personal financial objectives, situation or needs into account. Flare Cars strongly recommends seeking independent financial advice to take into consideration your own personal financial circumstances before entering into any lease arrangement.