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New car sales plunge almost 50 per cent as COVID-19 crashes demand
By Darren Gray
Car dealers want government incentives for drivers to upgrade to new vehicles and vehicle taxes abolished or reformed, after new car sales plunged a record 48.5 per cent in April because of the coronavirus pandemic.
It was the biggest fall recorded in almost 30 years of tracking the sales, as COVID-19 rattled consumer confidence and social movement restrictions kept people indoors.
Brett Davies from Nunawading Toyota says many customers wore gloves and face masks in April.Credit: Joe Armao
April sales plummeted to 38,926 vehicles, down from 75,550 in April 2019, as sales of passenger cars, SUVs and light commercial vehicles went into reverse.
Assuming an industry-accepted average sales price of $32,500 per vehicle, the figures suggest Australians spent at least $1 billion more on new cars in April 2019, than April this year.
"Clearly, the COVID-19 pandemic has had a major influence on the April sales result, and reflects a downturn in the broader economy right across the country," said Federal Chamber of Automotive Industries chief executive Tony Weber.
"Figures recently released by the Australian Bureau of Statistics show that 31 per cent of Australian citizens have experienced a decrease in income due to the pandemic," he said.
Mr Weber also pointed to figures showing that nearly three-quarters of Australian businesses had reported that reduced cash flow was expected to have an adverse impact on business over the next two months.
"These conditions inevitably impact consumer confidence and purchase decisions," he said.
The April sales plunge, revealed in figures from the Federal Chamber of Automotive Industries, marks the 25th consecutive month that new car sales have declined on a year-on-year basis.
Signs of the sales plunge have emerged in recent weeks, with the ASX-listed car dealership group AP Eagers revealing it had axed 1200 jobs, while the online vehicle classifieds website Carsales said it had temporarily stood down about 250 staff and cut executive pay by 20 per cent.
Australian Automotive Dealer Association chief executive James Voortman said it was the lowest national monthly new car sales figure since 1994.
"The extent of this plunge in sales is pretty unprecedented in modern times, and it's going to have significant repercussions for many dealers," he said.
Mr Voortman said sales weakened due to COVID-19 movement restrictions, as some consumers delayed decisions to buy because of economic anxiety and as some found it difficult to get finance.
Mr Voortman called for a review of taxes on vehicles which increased the cost of cars and discouraged buyers and a program that encouraged consumers to buy a new car and dispose of old ones.
The extent of this plunge in sales is pretty unprecedented in modern times, and it's going to have significant repercussions,
James Voortman, chief executive of the Australian Automotive Dealer Association
"Australia hasn't seen such a program (to encourage buyers), and we think it's one that will both stimulate the industry but also remarkably improve the safety and the emissions profile of our fleet," he said.
At the Nunawading Toyota dealership in Melbourne's eastern suburbs, many customers in April wore face masks and gloves, according to general manager Brett Davies.
Mr Davies said he wasn't surprised by the 48.5 per cent decline in new car sales. At Nunawading Toyota sales volumes were down about 45 per cent in April, compared to the same month last year.
"We had incremental improvement throughout the month and it finished off a lot better than we thought it would," he said.
"Mainly private buyers were down, so fleet [buyers] were still reasonably busy," he said.