No slowdown in sight for new-car sales boom

When it comes to driving a bargain, new-car buyers are set to have the upper hand for the foreseeable future. Having already enjoyed the best bargaining power in decades, a leading economist says interest rates are likely to remain low and the Australian dollar high for the next two years.

This combination -- which enables cheap finance on cars that are cheaper to import -- has created perfect buying conditions that have led to record sales over the past two years.

Chris Richardson, director of Deloitte Access Economics, says “the dream duo” of low interest rates and a high Australian dollar has been the driving force in the growth in new-car sales -- and buyers can expect these conditions to continue for some time.

“Our view is that the Australian dollar will stay around one for one until the middle of 2014 … not necessarily because of what’s happening in Australia but because of what’s happening [overseas]. Investors are worried about those currencies and are searching out ones like ours.

“That combination -- low interest rates, strength in the Australian dollar -- are a beautiful backdrop for strength in car sales and we expect it to continue for the next couple of years.”

Richardson said interest rates would not drop to “the emergency lows that we saw through the global Financial Crisis” because Australia’s economy is not in a crisis.

But he predicts the Reserve Bank will use low interest rates to stimulate the economy once the mega mining projects wind up in the next year or so. “The big driver of growth has been the mega mining projects,” he said.

“They’re spending a fortune, but it’s not that far away from a peak in that spend.” Confidential figures obtained by News Limited show that about 30 per cent of Toyota HiLux sales last year were to mining companies.

The HiLux topped the sales charts on six individual months in 2012 -- a record for a workhorse vehicle -- and was the second-best seller outright for the year behind the Mazda3 small car.

Meanwhile, prices of a number of leading models have been wound back by more than a decade. Nissan recently relaunched the Pulsar for the same price it was in 1996 and Toyota’s latest Corolla is the same price as it was 11 years ago.

Last month, Mercedes-Benz released a hatchback that was cheaper -- and better equipped -- than the most basic Holden Commodore. “One of the things that’s bad, by and large for Australia’s economy and is good for Australian car sales is the strengthening exchange rate,” Richardson said.

This reporter is on Twitter: @JoshuaDowling