New car sales
- Australian new car sales recorded a modest fall in January. Car sales fell by 1.9 per cent in January – marking the biggest monthly fall in six months.
- Passenger car sales slumped by 3.9 per cent in the month, while sales of SUVs rose by 2.9 per cent. In annual terms total vehicle sales are down 3 per cent on a year ago.
What does it all mean?
- New vehicle sales are effectively tracking sideways. After going through a period of consolidation followed by a modest pickup in activity in the mid part of 2010, signs of buyer caution are once again emerging. In annual terms vehicle sales are down almost 3 per cent on a year ago. The rate hikes of late last year is no doubt resulting in potential car buyers being more circumspect about future purchases.
- Despite this month’s weakness, in a longer run sense passenger vehicle sales are generally going nowhere. In trend terms monthly growth has been hovering close to zero for the last nine months. Encouragingly the weakness in other vehicles sales seems to be moderating after considerable lack of activity last year.
- In annual terms vehicle sales are down almost 3 per cent on a year ago, and while activity levels are likely to be subdued in the near term it is important to highlight that the midterm outlook is much more favourable. The strength in labour market conditions will be a clear underlying driver of a pickup in new car sales. And more importantly the strength of the Australian dollar should ensure that car dealers are able to pass on more savings to consumers thus driving up sales.
- What is required in the near term is interest rates to remain on hold, allowing consumers and businesses to adjust to the rate hikes that have taken place and in turn start spending again. CommSec anticipates that rates will remain on hold until at least May.
What do the figures show?
New car sales
- New car sales fell by 1.9 per cent in January after rising by 1.0 per cent in December.
- Passenger car sales fell by 3.9 per cent in the month, sports utility vehicles rose by 2.9 per cent while “other” vehicles (trucks, utes etc) were 1.3 per cent lower. In annual terms “other” vehicle sales were down 9.7 per cent on a year ago.
- In rolling annual terms, 235,417 SUV’s have been sold in the 12 months to January – the second highest reading on record. Overall SUV sales are down just 0.1 per cent on a year ago.
What is the importance of the economic data?
- The Australian Bureau of Statistics (ABS) provides monthly estimates of car sales in seasonally adjusted and trend terms after receiving the actual sales data from the car industry. The figures highlight the strength of consumer spending as well as conditions facing auto & components companies.
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