Figures released yesterday show that car sales fell by more than 12% last month in the first significant sign of a slowdown from the toxic cocktail of high oil and petrol prices, interest rates, taxes changes and low consumer confidence..
The figures, from the Federal Chamber of Automotive Industries (FCAI) showed that 77,324 cars, trucks and buses were sold in August – down 10,882 vehicles compared with the same month of 2007.
Year to date new vehicle sales are up 0.7 per cent on the same time last year, with 703,995 vehicles being sold. (They were up more than 2.6% at the end of July).
Despite industry claims, it wasn’t just the luxury car tax which forced sales lower last month, nor was it interest rates.
No one mentioned what was probably the major factor, which added to the pressure caused by the other two: and that was the loss of confidence among car buyers because of high petrol prices, which haven’t dropped by all that much since peaking in mid-July.
That all made for a nasty cocktail of factors that have seen sales slide noticeably.
And even though the three factors are important, it must be remembered that from July 1 we had noticeable tax cuts and unemployment hasn’t increased so far in the slowdown (although we might find out more about that next week).
With the Aussie dollar now trading around 83 US cents, compared to a peak of well above 98 US cents in mid July, the sharp near $US40 a barrel fall in oil prices hasn’t translating fully into lower petrol prices.
So petrol prices are still around a near crippling $1.44 to $1.68 cents a litre, depending on the time of the weekly price cycle.
And that is still making potential buyers reluctant to become actual buyers.
Yes the luxury car tax had an impact of dragging forward potential sales from July, August and probably September. And higher interest rates would have made people think again.
But interest rates rose sharply from February through to May and car sales proved remarkably resistant to the higher funding costs, and to the cost of petrol and diesel.
In fact if anything last month saw consumer confidence kick a little higher as petrol prices did fall a bit and there was widespread speculation that interest rates would fall; as we saw with this week’s RBA cut of a quarter of a per cent.
Overall sales were down by 12.3% compared with August 2007, with sales of luxury four-wheel-drives and limousines hardest hit.
Luxury 4WD sales dropped by almost a third, while limousine sales dipped by more than 40% after the luxury car tax was raised from 25% 33%. That tax remains unresolved, but may squeak through the Senate this week.
Luxury brand leaders, BMW, Mercedes-Benz, Porsche and Lexus all experienced sharp falls in sales (but rises in May and June.
Four wheel drive sales finally tipped over and dropped by around 20% last month, after rising 13% in the six months to June.
Figures released by the Federal Chamber of Automotive Industry show that the local car makers: Ford sales in particular, were hit last month.
Sales of the all-new Ford Falcon were down by almost 10% on the level last August when the previous model was being sold. Being a new model, it would have been expected that sales would have been higher, but it’s a big six cylinder vehicle and seems to have been hit by the consumer shift towards more fuel efficient cars).
Ford’s Territory 4WD dropped a nasty 28%: that’s getting to levels experienced by its US parent with some of its American made SUVs and light pick ups which have had a terrible year
Ford’s experience helps explain why the company has retrenched 350 employees from around November.
Sales of the rival Holden Commodore were down a touch on last year, despite the release of an all-new version of the station wagon and the accompanying strong media promotion.
Toyota was the market leader again in August, but its sales dropped a sharp 15% as sales of Toyota’s two locally-built cars, the Aurion and Camry, dropped by more than 33%.
The chief executive of the Federal Chamber of Automotive Industries, Andrew McKellar, said in a statement that the sales slump is a reflection of the broader slowdown in domestic demand in the economy.
"It can be attributed to the interest rate increases we’ve had over a period of time and also the recent instability in financial markets,” he said yesterday.
He says yesterday’s interest rate cut was a welcome move for the industry but was unlikely to turn around consumer sentiment on its own.
"Unfortunately it comes a little too late. Based on the evidence [of a slowdown] further measures will be required in the future to stabilise demand,” he says.
He urged the Government to take the market slowdown into account when drafting its response to the recently released review of the local automotive industry, which has recommended a further 5% cut in car tariffs from 2010.
"The pressure on the local car industry is absolutely intense and it’s a very significant concern that we are seeing the overall downturn in demand coinciding with a whole range of competitive pressures on the industry,” he says.
He also criticised the Federal Government for pressing ahead with plans to increase the luxury car tax at a time when consumer demand was falling.
Mr McKellar said that sales in all segments of the passenger vehicle market were down. Sales of Sports Utility Vehicles (SUVs) were also lower, except for the SUV large segment, which increased 23.3% last month. Toyota launched a new range of its Landcruiser vehicle.
Despite the fall in the market and its sales Toyota retained the top sales position in August with a 22.9%t market shar
