New car sales plummet as families curb spending

Australians shunned dealerships in 2019, with new car sales plunging to their lowest in eight years.

The Toyota HiLux is Australia’s best-selling vehicle.

Australians shunned car dealerships in 2019, with new motor vehicle sales for the year plunging to their lowest in eight years as a weak economy and tough lending conditions bit.

Australians bought 1,062,867 new cars in 2019, or 7.8 per cent fewer than the previous year, for the softest sales figure since 2011, according to data from the Federal Chamber of Automotive ­Industries. It was the second consecutive year of falling sales, and monthly sales on a year-on-year basis have now dropped for 21 consecutive months.

There were 84,239 new motor vehicles sales in December, a decrease of 3.8 per cent from the final month of the previous year.

“Competition [for the industry] is rife and margins are paper thin,” FCAI chief executive Tony Weber said. “It’s a tough time for brands and it’s a tough time for dealers.”

That said, “for those in a position to buy, it’s a very good time”.

Mr Weber said the 2019 sales figures reflected “a tough year for the Australian economy”.

Falling house prices, which have made homeowners less willing to spend on major items such as cars, and the longer-term problems of weak wages growth and high household debt have all contributed. A depreciating dollar against the Japanese yen and Thai baht has also weighed as it pushed import ­prices from those key markets higher.

Tighter lending restrictions following the banking royal commission also weighed on sales, Mr Weber said.

He said he hoped, however, that this year “self-regulation in the finance industry will loosen and come back to a more pragmatic perspective, allowing more buyers into the market”.

The latest figures show utes continue to top the sales rankings.

Toyota’s HiLux was again the best selling vehicle over the year, with 47,649 sales, followed by the Ford Ranger utility, with 40,960 sales. The third and fourth bestsellers in 2019 were small cars Toyota Corolla (30,468) and the Hyundai i30 (28,378). The Mitsubishi Triton utility truck rounded out the top five, with 25,819 sales.

 

Sales of light commercial vehicles, which includes utes, “have been very resilient”, Mr Weber said.

“The utility has the flexibility of being a work vehicle and dual cabs can also accommodate the needs of a family. They are very practical, and it’s the dual cab which is the real growth area there.”

Sports utility vehicles accounted for a record 46 per cent of total vehicle sales, Mr Weber said. A decade ago, SUV sales accounted for only a fifth of sales.

New cars have borne the brunt of Australian households’ spending strike, which has pushed ­national consumption growth to its lowest level in a decade and led to the first contraction in annual retail sales volumes since the early 1990s recession.

Vehicle sales are particularly exposed to changes in household wealth and property prices.

The Reserve Bank estimates that a 1 per cent increase in household wealth raises expenditure on motor vehicles by 0.6 per cent, and vice versa.

House values began falling in mid-2017, but have bounced in ­recent months. The new figures, however, show the recovering housing market is yet to spark an equivalent recovery in new car sales.

“The confidence factor [among consumers] is one of the most important things, and that is still lacking,” Mr Weber said.