Sales of cars and trucks were down 2315, or 2.7 per cent, last month compared with July last year, according to VFACTS figures released yesterday by the Federal Chamber of Automotive Industries.
In total 83,976 cars, trucks and buses were sold last month, with Toyota still No 1 on the sales chart.
But new vehicles sales are still strong for the year at 626,671 — up 16,004 on last year's record.
FCAI chief executive Andrew McKellar blamed fuel prices, interest rates and the wider economy for the buyer slowdown last month.
Large sedans and luxury cars took a beating, while interest in the small and medium segments slipped as well.
Sales of luxury cars slumped 33 per cent in July from June, while large sedans under $70,000 were down 9.5 per cent last month and more than 15 per cent year-to-date.
Many luxury importers reported brisk business in June as buyers tried to get vehicles ahead of the LCT increase.
European importers like BMW, Audi and Mercedes-Benz expect the softening in sales to continue.
Mr McKellar said the proposed tax hike has had a devastating impact on new car sales.
Mr McKellar predicted that, if the downturn in luxury sales continued, the Government would not receive the extra revenues it had projected — and there was a risk it would cost jobs.
Sales in most of the passenger car and sports utility vehicle (SUV) segments were down last month except for light cars (up 1.0 per cent), SUV medium (up 8.1 per cent) and SUV large (up 7.4 per cent).
One bright spot was light commercial vehicles, which increased 6.3 per cent (897 vehicles) compared with the previous July.
Toyota remained the top-selling make last month with 24.4 per cent of the market, followed by Holden on 13.3 per cent and Ford 11.3 per cent.
Year-to-date Toyota leads the race with 147,961 vehicles sold, followed by Holden on 78,271 and Ford 63,933.
Solid marketing and competitive deals on its HiLux, Corolla and Yaris has put Toyota at the forefront.