Once again a strong month of car sales has belied the prevailing notion that demand in the economy is weak and on need of a push, as we got with last week’s 0.25% cut in interest rates from the Reserve Bank.
The car sales data came after we saw retail sales for September up 0.4% and 0.6% for the third quarter (in volume terms).
But sales of clothing and footwear were down, as were sales at department stores.
But car sales remain solid, as the October figures showed.
Figures from the Federated Chamber of Automotive Industries show that 85,196 new vehicles were sold in the month of October, up 5.3% (4271 vehicles) over the same month in 2010.
Sales in October were 1.9% lower than in September.
Oil prices strengthened towards the end of October, but wouldn’t have been enough to alter buying intentions.
The chamber said the October figure was the strongest for the month in four years: so much for cautious consumers, business or private.
It was also the second strongest month this year and means the industry will probably just top the one million unit sales figure by the end of December.
Sydney analyst Fusion Strategy said in a note on Friday that passenger car sales had their best growth month of the year so far.
"Overall sales up 5.28%, Passenger up 5.01%, SUV up 5.44%, Light Commercial 5.74% and Heavy Commercial up 6.37%," Fusion noted.
Fusion said private sales were up 12% in October, business sales were up 3%.
Federal Chamber of Automotive Industries (FCAI) chief executive Ian Chalmers said in a statement that "Manufacturers are reporting a steady increase in demand, placing the industry in a strong position to reach our target of one million sales for the calendar year.
"So far this year 837,324 new vehicles have been sold. While this is 2.8 per cent fewer than for the same period in 2010, last month’s figures are the best October sales result since 2007 and suggest a return to pre-GFC sales volumes."
Sales of locally manufactured models also continued to grow, with 13,450 units delivered representing up 20.1% increase over October 2010.
Mr Chalmers said, "relatively stable fuel prices in October, combined with a perceived return of business confidence, were likely contributors to the strong sales".
Toyota’s Corolla was the single best selling model in September with 3593 sales, followed by Toyota HiLux (3480), Volkswagen Golf (3337), Mazda3 (3185) and Holden Commodore (3018).
Toyota was the best-selling brand in October with 17,239 sales (20.2%), followed by Holden (10,209, 12.0%) and Hyundai (75078, 8%).
Mazda followed with 8.2%, just topping Ford with 8.1%.
But buried in the data was some bad news: despite the rise in locally-made cars, Holden’s Commodore and Ford’s Falcon continued to lose ground.
Sales of the Commodore fell 20% last month.
Year-to-date Commodore sales have dropped 8.9% and it is less than 400 cars ahead of the Mazda3 in the battle to be crowned the best-selling car for 2011.
The big increase in locally made cars (and keeping Holden’s sales buoyant) is the Cruze.
Australians bought just 200 fewer Cruzes last month than Commodores, 3,018 to 2805 Commodores.
But the Commodore is holding up well compared with the Ford Falcon, which is down almost 40%.
Meanwhile, Toyota, Volkswagen and Mazda are riding high on the back of strong small car sales.
Toyota claimed a one-two for October with the Corolla taking top spot ahead of the HiLux tradies four wheel drive.
Volkswagen was a surprise performer with its Golf taking third spot behind the Toyotas ahead of the Mazda3.
Top 10 sales by model in October:
1.Toyota Corolla – 3593
2.Toyota HiLux – 3480
3.Volkswagen Golf – 3337
4.Mazda3 – 3185
5.Holden Commodore – 3018
6.Holden Cruze – 2805
7.Hyundai i30 – 2798
8.Toyota Camry – 2725
9.Ford Falcon – 1591
10.Mitsubishi Lancer – 1549
Top 10 brands (year-to-date)
1. Toyota
2. Holden
3. Ford
4. Mazda
5. Hyundai
6. Nissan
7. Mitsubishi
8. Volkswagen
9. Subaru
10. Honda
Despite this good news, we should not forget that the outlook for our economy is dependent now on what happens in Europe, as the Reserve Bank reminded up on Friday in its 4th Monetary
In its listing of risks to the Australian economy the RBA made it very clear, the biggest downside risk at the moment is Europe.
"The largest risk to these forecasts is the sovereign debt and banking problems in the euro area.
"The Bank’s central scenario continues to be one in which the European authorities do enough to avert a disaster, but are not able to avoid periodic bouts of considerable uncertainty and volatility.
"A worse outcome in Europe would adversely affect the Australian economy, and underlying inflation would be likely to decline.
"The year-ended rate of CPI inflation is expected to fall below underlying inflation in early 2012 as banana prices return to more normal levels.
"It is then expected to increase to around 3¼ p
