New car sales show Victoria in the economic slow lane as its battles COVID-19 lockdown

New cars sales have confirmed fears that Victoria is now lagging economically compared with other states as it struggles to contain its coronavirus outbreak.

The 2019 Toyota RAV 4 range

New car sales have provided the first glimpse of how coronavirus-riddled Victoria is beginning to lag economically behind Australia’s other states and territories that have managed to contain the virus.

Car sales in Victoria slumped 28 per cent in July — the month Premier Daniel Andrews reintroduced stage three restrictions in Melbourne before elevating the lockdown to stage four this week.

The Victorian figures were far below the national decline of 12.8 per cent and in stark contrast to Western Australia — where its government has been able to limit the downturn and contain the virus — which recorded a 1 per cent decline. Elsewhere new car sales eased 7.8 per cent in NSW, 9.1 per cent in Queensland 5 per cent in South Australia, according to official data from the Federal Chamber of Automotive Industries (FCAI).

FCAI chief executive Tony Weber is expecting Victoria to face further carnage in the months ahead as it reels from the economic devastation of Melbourne’s hard six-week lockdown.

“The extended stage four restrictions which have now been invoked in Australia’s second largest market, Victoria, will no doubt further challenge the industry during the coming months,” Mr Weber said.

Not even up-market German brand BMW was able to escape the downturn, reversing months of stellar performance where it defied the broader market with strong sales increases.

BMW sales dived 42.5 per cent in July. The brand had been defying the market after it registered up to 10 per cent of its “sales” as company cars, which would later been onsold to customers at a deep discount.

But BMW also faced supply challenges, with European manufacturing shutting down for six to eight weeks. Still its results were in deep contrast to its rivals, with Mercedes-Benz posting an 8.5 per cent decline, while Audi surged 53.3 per cent.

Overall, the Toyota RAV 4 supplanted its stablemate the Toyota HiLux as Australia’s best-selling car in July, marking an interruption to the ute’s reign as the nation’s most popular new vehicle.

More than 4300 Toyota Rav 4 vehicles were sold in July, while HiLux sales more than halved to 2947.

While it was briefly pipped as top vehicle on a month-by-month basis in October 2017, the HiLux has in annual rankings been Australia’s most popular vehicle since 2016.

Nevertheless, passing the crown to the Rav 4 meant Toyota retained its spot as market leader by a margin of 7702 vehicles, beating Mazda and Hyundai for the top spot.

A spokesman for Toyota attributed the RAV 4’s success to strong interest in its hybrid model and the securing of additional vehicle supply.

“Toyota Australia has recently been able to secure additional supply of RAV4 Hybrids that began to be delivered from July onwards and we believe that this has also contributed to the higher than usual sales performance in the month of July,” the spokesman said.

Overall, the 72,705 vehicles sold in July, a national decline of 12.8 per cent, marks the 27th consecutive month of falling car sales.

The continuing deterioration of the new car market comes as the corporate regulator investigates the possibility of clamping down on the sale of add-on insurance and warranties alongside new vehicles.

In a release on Wednesday, Australian Securities and Investments Commission said it was canvassing industry sentiment over the proposed changes, which would see a deferred sales model imposed on the products that ASIC claims are often sold through “a broad range of unfair sales tactics” and provide “poor value” to the consumer.

In a report released in October 2019, ASIC found that across the five main add-on general insurance products sold through car yards in the 2013-15 financial years, just 9c of claims were paid out for every dollar of premium paid by the consumer.

For warranties, it found a claims ratio of 23c for every dollar of premium paid.

A deferred sales model would introduce a mandatory pause between buying a vehicle and the purchase of insurance or a warranty, so consumers can research their options.

The federal government is also considering implementing a deferred sales model for add-on insurance more broadly, after the financial services royal commission unearthed the widespread use of high-pressure sales tactics to sell policies that represented “poor value for money” for consumers.

Rugged and popular – one of the Toyota HiLux range.