Economy: Car Sales Up Again

As we have just read, the Reserve Bank board meets today to look at interest rates and the state of the economy as we head into 2012.

One thing they will be wondering about is the state of consumer demand: retail sales have been rising now for the four months to October, even though that month only saw a rise of 0.2%.

That’s despite still subdued levels of confidence for consumers and business, according to monthly surveys from Westpac and the NAB, even though there has been a noticeable improvement in the last couple of months.

One figure out yesterday though tells us consumer demand is much stronger than the retail sales data tells us.

After a very strong November, Australian car sales will top the 1 million mark for only the fourth time in 2011, giving lie to the continuing claims that private buyers and business are cautious and not spending.

Figures from the Federated Chamber of Automotive Industries showed that 88,654 cars, trucks and buses were sold last month – an improvement of 1.5% over November last year and 3,458 or 4% above the 85,196 units sold in October.

This was the second-highest November month on record, surpassed only by the 92,801 sales result in 2007. It was also the second strongest month of 2011, so farm after June when more than 96,000 units were moved.

Total sales for the year to date are running 2.4% or 23,009 vehicles behind the same period last year.

In August the shortfall was 4.4%, thanks to the slump in imports of cars from Japan because of the damage done to car production by the March 11 disasters.

Sydney analysts Fusion Strategy said yesterday that if we get a repeat of November’s strong sales in December, then car sales for the year could match 2008’s 1.012 million sales.

By the end of last month, just over 925,000 cars had bee sold in Australia, according to the FCAI data.

It’s been a constant message this year that many economists, analysts and the media fail to recognise the solid performance of car sales this year, especially since the big hit delivered from April through September from the March 11 quake and tsunami in Japan which slashed car exports to markets like Australia.

Car purchases remain one of the major decisions many individual and business buyers will make after buying a house and superannuation and yet analysts forget it when talking about weak retail sales.

The US treats car (and petrol) sales as part of retailing and figures including and excluding car sales are produced each month so that analysts and others can get a good handle on how the sector is travelling.

Business sales were up 6% last month on a year earlier, but there were only small increases for private and business purchases.

But we have had four straight months of growth in the car market as we head towards the end of the year.

FCAI chief executive Ian Chalmers said in a statement yesterday that while the total for 2011 will finish down on 2010 (1.035 million units), it is still likely to be a very good overall result for the automotive industry.

“For the past four months in a row sales have been trending above the same period for 2010. This suggests improving consumer confidence in Australia’s economic prospects,” Mr Chalmers said.

“Many car brands have been proactive in appealing to car buyers by offering lower prices, improved equipment and low finance rates. Consumers are responding positively to the value that is widely on offer.”

Mr Chalmers said the November sales result might have been even better if not for supply constraints which affected some brands.

“The flood in Thailand which continues to affect some car factories located there and the lingering after-effects of the Japanese earthquake and tsunami have played a part in limiting supplies of some popular models.”

The best-selling brand in November was Toyota with 17,436 followed by Holden with 9,761 and Ford with 8,103.

Toyota Corolla was Australia’s best-selling car in November, attracting 3,731 customers, followed by Mazda3 (3,480) and Toyota HiLux (3,332).

Market growth in November was also driven by the continued rise in the popularity of Sport Utility Vehicles (SUVs).

SUV Compact sales were up 12.6 per cent and SUV Medium sales were 16.8 per cent higher than the same month last year.

SUV Large volumes were up 5.4 per cent and SUV Luxury sales boomed by 36.1 per cent.

Other segments which enjoyed growth in November were Small (+1.4 per cent) and Medium (+2.3) passenger cars, Sports cars (+1.9), 4×4 utilities (+6.7) and Light Buses (+41.3).

“Assuming the current trends carry through December we are confident that total annual sales will exceed one million for only the fourth time in Australia’s history,” Mr Chalmers said.

Sales of Toyota’s Camry models were down because of a combination of parts supply problems from Thailand where the recent floods have affected output, and the launch of the new model later today.

The company says sales were down in November for that reason and won’t start rising until January when showrooms get more supplies and the Christmas/end of selling year seasons are out of the way.

November’s Top 10: