Scrap car prices depend on steel market price which hit bottom during March 2020 and so did your Kiwisaver fund. At that time the drop in scrap car prices could be used to accurately predict the day-to-day decline in your Kiwisaver nest egg.
Steel comprises about 65% of the weight of a typical car and steel market price is reflected in how much cash for cars businesses can pay wrecked car owners as lower steel prices reduce profit margins.
The economic downturn from the sudden supply and demand shock caused by the 2020 pandemic hit cash for cars businesses just as hard as the average Kiwi and their Kiwisaver fund. Wreckers had to keep employees on the payroll, pay rent and yet close junkyards. Vehicle purchases and car removals could only be scheduled after the lockdown alert level was lowered. In this blog post we dive deep to reveal the correlation between wrecked car prices and kiwisaver funds.
Steel price and Kiwisaver growth fund
The annual kiwisaver report released by the Financial Markets Authority (FMA) that covers the period from 1 July 2019 to 30 June 2020 revealed startling impact on kiwisaver funds. Kiwis saw a record $821 million decline in their savings. Panicked savers switched from growth and riskier funds to cash funds. There were 256,393 fund switches up 50% from the previous year. The same period saw kiwisaver scheme providers earn $539 million in fees up from $480 million. Kiwisavers who switched funds locked in their losses.
Steel price saw declines similar to kiwisaver funds. Here we compare the typical kiwisaver growth fund performance to the price of steel during the last 12 months. The scrap car prices are set based on the NYSE Arca Steel Index which is a weighted index of the market capitalization of the biggest companies that produce steel products. The graph shows the Arca steel index and average kiwisaver growth fund performance. The Kiwisaver fund is scaled to match the steel index on Nov 19, 2020 a year from the time this blog post is being written.
At its lowest the Arca index dropped nearly 50% while the average Kiwisaver growth funds dropped 25%. By Nov 2020 because of the progress on vaccines and an unexpected economic resurgence both Arca and Kiwisaver funds saw recovery close to the pre-pandemic prices. The high level of correlation between steel price and Kiwisaver funds shows that an auto dismanlter could predict the declines in your Kiwisaver funds based on how much less cash for cars customers had to be paid because of lowering steel prices. Cash for cars deals prices have also recovered, and we are happy to report that we are paying wrecked and unwanted car owners more.
Steel price during the last global financial crisis.
The 2008-2010 financial crisis saw a similar pattern of declining steel prices first and then gradual recovery. The decline in scrap car prices was because of decline in car manufacturing which uses recycled steel from end of life cars.
Find more statistics at Statista
The lesson here is that if you are a wrecked car owner, hold on to it if you can during a financial crisis. Reports from around the world suggest that second-hand car prices have risen so there is some solace for people who own used cars. In the mean time You can contact us for above market scrap car prices and best value cash for car deals. We take pride in looking after our customers.
As always, don’t forget to check out our services and products page DEOL Car Solutions. For additional information Contact us by filling out the contact form or send us an email or for that matter call us.
