The Australian used car market is experiencing a significant surge in 2025. This growth stems from a combination of economic shifts, evolving consumer preferences, and lingering effects from global supply chain disruptions. Australians are increasingly turning to pre-owned vehicles as a practical and value-driven choice.
Several key factors contribute to this booming market. These include improved new car supply, changes in consumer purchasing power, and the increasing appeal of electric and hybrid used vehicles. Understanding these influences helps explain why used cars are a popular option for many Australians this year.
Economic Landscape and Consumer Behavior
Australia’s economic environment in 2025 directly impacts the used car market. Economic stability, with a stable inflation rate of 2.8% and a maintained cash rate of 4.35% as of Q4 2024, has bolstered consumer confidence. This stability enhances purchasing power, even with a decelerated wage growth of 3.5%. The unemployment rate has decreased to 3.9%, further enriching consumer spending capacity. This allows more Australians to consider purchasing a vehicle, and many are finding better value in the used car segment.
The average days to sell a used car climbed to 51.3 days in March 2025, which is the highest figure since November 2023. This indicates buyers are taking more time to select vehicles, suggesting a more considered approach to purchasing. This careful deliberation often leads to choosing used cars due to their immediate availability and lower price points compared to new models.
New Car Supply and Affordability
New car supply has significantly improved in 2025, a welcome change after years of disruptions. Global supply chain issues, particularly semiconductor shortages, previously constrained new vehicle production. This forced many buyers into the used car market, driving prices up. Now, with supply chains easing, more new vehicles are available. However, this has not diminished the used car market’s strength. Instead, it has led to a rebalancing, where used car prices have begun to stabilize, making them even more attractive.
For instance, in March 2025, total used vehicle sales reached 200,566 units, a significant 14.8% increase from the previous month. This rebound indicates robust demand. The average price of used vehicles has stabilised, with some categories experiencing minor declines of around 5-8% compared to 2023. This makes used cars a more affordable alternative for those impacted by the rising cost of living and higher interest rates.
The Rise of Online Marketplaces and Digitalisation
Digital platforms play a crucial role in the booming used car market. Online marketplaces offer extensive information and enhance transaction transparency. This shift towards digitalisation democratizes the market and increases transaction volumes, especially in urban areas with high digital literacy.
Dealers have adapted by offering virtual tours, comprehensive vehicle histories, and delivery services, making the buying process more convenient. This digital transformation simplifies finding and purchasing a used car, attracting tech-savvy buyers who prefer to research and compare options from home. Approximately 61% of Australian used cars were sold privately in 2023, highlighting the prevalence of direct consumer-to-consumer sales, often facilitated by these online platforms.
Beyond the booming market, maintaining your vehicle’s value is crucial. When it’s time to upgrade or dispose of an old vehicle, responsible recycling is important. Companies like Metalbiz Recyclers in Queensland offer professional services for managing end-of-life vehicles and scrap metal Logan. They provide free pickup services for scrap cars and other metal waste, ensuring environmentally friendly disposal and processing. This responsible approach helps minimise landfill waste and contributes to the circular economy by recovering valuable materials.
Growing Demand for Hybrid and Electric Used Vehicles
The shift towards sustainable transportation is significantly impacting the used car market. Hybrid and Electric Vehicle (EV) sales have seen substantial growth. EV sales in Australia surged by 55% in the first half of 2024. This growth is driven by government incentives, an expanding charging network, and new models entering the market.
While the supply of used EVs is still lower compared to petrol cars, this trend is changing as more new electric models are sold and older ones are traded in. Consumers are increasingly choosing these options to lower their carbon footprint and save on fuel costs. For example, hybrid vehicles reflect a growing desire for more economical vehicles. In March 2025, hybrid used car sales increased by 16.4%, showing strong consumer interest in fuel-efficient options.
Depreciation Benefits and Cost Savings
One of the most compelling reasons for the used car market boom is the financial advantage. New vehicles typically lose a significant portion of their value, sometimes 20-30% in the first year alone, due to depreciation. Buying a used car means the buyer avoids this initial, steep depreciation. This allows consumers to acquire relatively newer models with modern features at a much lower cost.
Lower insurance premiums and registration costs also drive the used car market. Compared to new vehicles, used cars generally have reduced insurance costs due to their lower market value. This makes them a more affordable choice for many Australians, especially younger drivers or those on a budget. For example, a $35,000 used car loan over five years with an average interest rate of 7.43% p.a. results in $7,010 in total interest. This compares favorably to the total cost of a new car, which includes higher initial purchase prices and depreciation. Additionally, considering professional scrap metal collection for end-of-life vehicles can further add to savings, as it ensures proper disposal and potential rebates from the scrap metal value.
Popular Used Vehicle Segments
Certain vehicle types are particularly popular in the Australian used car market. SUVs continue to be the best-selling vehicle type, taking a commanding lead with over 85,083 units sold in March 2025, a 16.5% increase. Passenger cars accounted for 74,919 sales, increasing by 14.7%. Utes also remain strong with 34,691 sales.
Australians prefer these versatile vehicles for their space, functionality, and ability to handle both city driving and off-road adventures. The continued strong market for large vehicles shows Australia’s preference for SUVs and utes, which fit both city and country living needs. This segment continues to grow, further fueling the demand in the used car sector.
Impact of Interest Rates and Financing Options
Interest rates play a vital role in consumer purchasing decisions. While the Reserve Bank of Australia (RBA) has adjusted rates based on economic conditions, lower interest rates generally make car financing more affordable. The average Australian car loan interest rate for someone with a good credit score is 7.43% p.a. as of June 2025. This competitive rate encourages borrowing and investment, which includes better deals on car loans.
Many buyers opt for financing options, and the affordability of monthly repayments is a critical factor. For those considering an electric vehicle, the Australian government’s Electric Car Discount allows used Battery Electric Vehicles (BEVs) registered on or after 1 July 2022 and valued under the Luxury Car Tax threshold to qualify for Fringe Benefits Tax (FBT) exemption. This further enhances the savings for those looking to purchase a used EV.
The booming used car market in Australia for 2025 is a clear reflection of changing economic conditions, increased accessibility through digital platforms, and a growing consumer preference for value, sustainability, and immediate availability. As the market continues to evolve, the advantages of choosing a pre-owned vehicle remain significant for many Australians. This strong demand for used cars highlights a practical and informed shift in consumer buying habits. When considering your options, remember to look into services for scrap metal collection if you have an old car or metal waste, contributing to a more sustainable future.