Kia rolls out robotic guard dogs to patrol factory
We wouldn't normally write a story about a new security guard starting work at...
Browse over 9,000 car reviews
New-car sales hit the brakes in August, the biggest decline since the Global Financial Crisis.
Sales of new cars hit the brakes in August. The seventh month in a row of slowdowns was also the biggest drop since the Global Financial Crisis, figures released Wednesday are expected to show.
The total market was down 5.5 per cent, the Top 10 sellers were down by 8 per cent, while six of the Top 10 brands posted an average decline of 15 per cent (compared with the same month last year), confidential preliminary figures show.
The downturn has the industry in a spin given Commsec data shows car affordability is at a 38-year high and prices are at 20-year lows.
The chief executive of the Australian Motor Industry Federation, Richard Dudley, says the downturn has been driven by widespread concern about changes to the Federal Budget, and an increase in unemployment.
National unemployment has risen from 5.7 per cent of the population to 6.4 per cent over the past 12 months, adding 109,000 people to the jobless market (680,000 to 789,000), Australian Bureau of Statistics figures show.
“Rising unemployment and delays in changes to the Federal Budget have caused uncertainty, and that’s enough to put the brakes on car sales,” said Mr Dudley. “The (budget) delays are sending mixed signals to consumers who are unsure what extra costs are around the corner.”
“All these factors play out in consumer confidence and buying habits. If consumers have less disposable income and more uncertainty, then they delay making big purchases such as a car,” said Mr Dudley. “A new motor vehicle is the second largest expense after a home, so the decision weighs heavily on the minds of car buyers.”
The industry is puzzled by the sudden drop in sales given Australia is “the most volatile and competitive market anywhere in the world”, said Mr Dudley, with 65 brands competing for just 1.1 million sales annually. In North America, 53 brands compete for 15.6 million sales.
Toyota, the market leader in Australia for the past 11 years, was down by 11.9 per cent in August (compared to the same month last year) while Mazda, the most popular brand among private buyers, was down by a staggering 23.4 per cent.
“We continue to see low levels of consumer confidence and that’s having a real impact on the market," said Holden spokesman George Svigos. "While Holden’s sales are up for the year, the overall industry continues to be down and we expect the remainder of the year to be extremely competitive”.
Hyundai was among only three brands that posted solid gains, overtaking Mazda for the fifth month in a row for the first time ever.
Ford, the first of the local manufacturers due to shut its local factories, in 2016, rose by 11 per cent in August.
Meanwhile, car industry insiders believe there are other factors behind the overall market downturn.
One theory is that Australians have “new-car indigestion” after five years of record sales driven by low prices and low interest rates.
The other theory: car makers are not “jamming” new vehicle stock into dealers as aggressively as previous years.
“There has been a concerted effort by manufacturers to lower inventory levels,” said one car company CEO who did not wish to be named.
“There has also been a key strategy change by many manufacturers to not push ‘cyber’ cars through the dealer network, meaning today’s reported retail figures are more accurate.”
Last year, several brands were accused of “over-reporting” new cars as sold, even though they were yet to be delivered to a customer.
At least one of those brands, Nissan, admitted two months ago the practice occurred but says it has since balanced its books by under-reporting the number of cars it has delivered this year.
Meanwhile, the industry insider says, manufacturers are “coming to terms with the continuing downturn globally … and production levels are being more reflective of the global sales demand”.
As with the past few months, however, favourable interest rates and an oversupply of vehicles will continue to give car buyers the upper hand when it comes to negotiating a sharp price and a big discount.
Top 10 brands in August 2014
Toyota: 15,650, down 11.9 per cent
Holden: 8650, down 18.5 per cent
Hyundai: 8600, up 10.2 per cent
Mazda: 7500, down 23.4 per cent
Ford: 6900, up 11 per cent
Mitsubishi: 5250, down 7.0 per cent
Nissan: 5150, up 7.9 per cent
Volkswagen: 4050, down 9.9 per cent
Subaru: 2900, up 0.7 per cent
Honda: 2750, down 16.5 per cent
* Preliminary figures, rounded. Percentage change compared with August 2013.