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Used vehicle prices soar; Darwin cheapest for fuel
Petrol Prices; Used vehicle market

Fuel prices: Last week the national average price of unleaded petrol fell by 2.6 cents a litre to 132.0 cents per litre (c/l) according to the Australian Institute of Petroleum.

Used car prices: According to the Datium Insights – Moody’s Analytics Used Vehicle Price Index, used vehicle prices rose 35.8 per cent in the year to January – the biggest lift in prices since the series began in 1999. Used vehicle prices also rose 4 per cent in the first week of February.

Movements in the petrol price can affect consumer spending, and in turn, prospects for retailers. Used car price data is useful in gauging activity levels in the motor vehicle market.

What does it all mean?

• Both used and new vehicle prices continue to soar. The latest data shows that prices of used vehicles are up almost 36 per cent over the year – the biggest gain in over 21 years. Supplies of vehicles are still disrupted by Covid-driven production delays. In particular, car makers are finding it hard to secure parts like semi-conductors. And demand for vehicles remains strong as people increasingly prefer to drive themselves rather than relying on public transport – especially locally with reports of some services being cut during the pandemic.

• Darwin remains the surprising winner of the title of cheapest capital city for fuel. According to MotorMouth, unleaded petrol in Darwin today is around 16 cents a litre cheaper than either Sydney or Melbourne. Darwin doesn’t have a discounting cycle, raising further questions on the value of the practice.

• Motorists will need to get used to dearer petrol prices with global oil prices at 12-month highs. The saving grace for motorists is that the Aussie dollar is 10 cents higher than a year ago versus the US dollar, keeping down import prices.

What do you need to know?

Weekly petrol prices

• Last week the national average price of unleaded petrol fell by 2.6 cents a litre to 132.0 cents per litre (c/l) according to the Australian Institute of Petroleum. Metropolitan prices fell by 4.5 cents to 134.4 c/l but regional prices rose 1.0 cent to 127.2 c/l.

• Average unleaded petrol prices across states and territories over the past week were: Sydney (down by 4.9 cents to 137.0 c/l), Melbourne (down by 8.5 cents to 138.2 c/l), Brisbane (down by 13.2 cents to 130.8 c/l), Adelaide (up by 16.9 cents to 137.5 c/l), Perth (up by 2.2 cents to 127.6 c/l), Darwin (unchanged at 119.4 c/l), Canberra (up by 0.8 cents to 126.7 c/l) and Hobart (up 0.3 cents to 126.4 c/l).

• The smoothed gross retail margin (2-month rolling average) for unleaded petrol rose from 16.99 cents a litre to 17.11 cents per litre (24-month average: 15.24 cents a litre).

• The national average diesel petrol price rose by 1.0 cents to 124.7 cents a litre over the past week. The metropolitan price lifted 1.2 cents to 123.9 cents a litre and the regional price was up 0.9 cents to 125.4 cents a litre.

• Last week, the national average unleaded Terminal Gate Price (TGP) was up 1.2 cents to 113.5 cents a litre. The terminal gate diesel price was up 0.8 cents to 112.8 cents a litre.

• Today, the average unleaded TGP stands at 115.0 cents a litre, up by 2.1 cents over the week. The terminal gate diesel price stands at 114.3 cents a litre, up 2.2 cents a litre over the week.

• MotorMouth records the following average retail prices for unleaded fuel in capital cities today: Sydney 135.0c/l; Melbourne 135.3c/l; Brisbane 125.1c/l; Adelaide 123.7c/l; Perth 120.1c/l; Hobart 126.5c/l; Darwin 119.4c/l; and Canberra 127.1c/l.

• Last week the key Singapore gasoline price rose by US$4.59 or 7.5 per cent to an 11-month high of US$65.42 a barrel. In Australian dollar terms, the Singapore gasoline price lifted $6.59 or 8.3 per cent to an 11-month high of $86.16 a barrel or 54.19 cents a litre.

Used vehicle market

• The Datium Insights-Moody’s Analytics Used Vehicle Price Index “increased by 35.8 per cent on a year-ago basis in January. This is the highest rate for a series that goes back to 1999. Car prices rose by 33.2 per cent, while truck prices increased by 41.8 per cent. Vehicle retention value, measured as price/MSRP, rose by 34.2 per cent compared with a year earlier. The car component increased by 31.1 per cent and the truck component rose by 39.3 per cent.”

• Datium Insights have reported the following results for the past week:

“Prices increased in the first week of February (+4 per cent) with ex-Government cars (+9.2 per cent) leading the increases

Supply was largely flat (+1 per cent) with stock still below par

Clearance rates saw a strong increase (+6.4 per cent) with ex-Council vehicles performing well

Prices for the top 15 traded vehicles were largely positive with the Ford Ranger (+4.7 per cent) and Mitsubishi Outlander (+3.9 per cent) leading increases

Stock still remains considerably low.”

What is the importance of the economic data?

• Weekly petrol prices data are compiled by ORIMA Research on behalf of the Australian Institute of Petroleum (AIP). National average retail prices are calculated as the weighted average of each State/Territory metropolitan and non-metropolitan retail petrol prices, with the weights based on the number of registered petrol vehicles in each of these regions. AIP data for retail petrol prices is based on available market data supplied by MotorMouth.

• Data analytics firm, Datium Insights, provides a weekly report on the used vehicle market. Datium Insights and Moody’s Analytics also issue a monthly reading on used vehicle prices. The data assists in gauging the strength of a key component of consumer spending and provides insights on the Autos and components sector of the sharemarket.

What are the implications for investors?

• Higher prices for both petrol and cars show that inflation still exists and needs to be watched. Longer-term yields are rising on economic recovery hopes and the prospect for higher inflation.

Important Information

The information presented in this email is an extract of a CommSec Economic Insights report. The full report is published on the CommSec website (under Market News > The Markets). The extract and report are approved for distribution in Australia only and must not be directed or distributed to any person or entity outside Australia, except with the prior approval of your Business Unit Compliance team.

The extract has been prepared without taking into account your objectives, financial situation or needs. It is not to be construed as a solicitation or an offer to buy or sell any securities or financial instruments, or as a recommendation and/or investment advice. Before acting on the information in this report, you should read the full report and corresponding disclaimers, and consider the appropriateness and suitability of the information, having regard to your own objectives, financial situation and needs and, if necessary, seek appropriate professional of financial advice.

Published by Craig James, Chief Economist, CommSec