Inside Australia's used car 'COVID tax'

Flushed with cash and nostalgic for classic motoring, Australians have sent the price of used cars to near unthinkable levels.

Inside Australia's used car 'COVID tax'

Flushed with cash and nostalgic for classic motoring, Australians have sent the price of used cars to near unthinkable levels.

Colloquially known as the "COVID tax" among enthusiasts, some 1990s motoring icons – such as Nissan's Skyline and Toyota's Landcruiser – are now worth more than a house deposit.

A 1999 Nissan Skyline GT-R was worth approximately $40,000 when new and some examples now retail for $240,000, meaning as an investment its value has grown 500 per cent.

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Mark Haybittle is a veteran classic car investor with Supercar Secrets, a business that selects cars on behalf of investors that are likely to double or triple in value.

He believes that a lot of the money Australians saved by not going on holidays has been funnelled into the classic car market.

"Things could have gone a number of ways with the arrival of the pandemic," said Mr Haybittle.

"But as it turned out, Aussies have been redirecting the cash they might otherwise have spent on holidays into this booming market of classic cars, and reaping the benefits."

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Mr Haybittle's notes show particular value coming from homegrown Australian cars due to the death of the local industry and a resurgence in old four-wheel-drives.

"While Japanese cars are currently the hottest segment of the market, that very first car of yours might also be worth much, much more than you bought it for," Mr Haybittle notes.

"Kingswood's for $50K, Commodore's for $100K, a Cortina for $70K, and a humble Ford Escort now at more than $30K."

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Another COVID winner has been the humble Landcruiser. While clean restored examples will fetch the best price, even humble farm trucks have exploded in value.

"Vintage 4WDs are also very popular. A 1971 Toyota Landcruiser FJ40 is currently worth $119,990. Just 24 months ago, the 50-year-old veteran would have cost you only $27,000," Mr Haybittle said.

"Very few, if any, investment options have seen such meteoric rises across a similar period."

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A January report by CommSec found that in December 2020, the price of used vehicles rose by 35.2 per cent, marking the strongest result for the market in 21 years.

"One of the standouts in the COVID-19 environment has been the lift in demand for used vehicles, driving prices sharply higher," wrote CommSec Chief Economist Craig James.

"Most car owners expect to see the value of their rides slipping over time, rather than rising. But used vehicle prices are up more than 35 per cent compared with a year ago.

"That lift in used car prices boosts personal wealth and spending and borrowing capacity."

The information provided on this website is general in nature only and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information on this website you should consider the appropriateness of the information having regard to your objectives, financial situation and needs.

Source : 9 News More   

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