Earlier this week, it was the slump in retail sales that had pundits worried for the broader economy:
Today, it’s the decline in new car sales, which has led to profit downgrades from Australia’s two big listed car dealerships. From The AFR:
Automotive Holdings Group warned on Thursday morning that softer trading in April on the previously strong eastern seaboard, a weak Western Australian market, and tightening consumer credit conditions in the automotive financing sector had been behind a slowdown. It runs 109 dealerships in NSW, Victoria, Queensland, Western Australia and New Zealand, and a refrigerated logistics division.
It came just a day after Queensland-based AP Eagers, with a market capitalisation of $1.4 billion, warned of a likely decline of first half profit before tax of between 7 to 9 per cent because of an unexpected decline in vehicle buying by consumers, business and government…
Martin Ward, the chief executive of AP Eagers, said… “the industry expectations for the first four months of the year were for an equal or better market than last year’s, so the whole industry has been caught by this unexpected decline”…
AHG managing director John McConnell said on Thursday the “tightening conditions in the automotive market have been an increasing challenge in the half”.
A look at the ABS new car sales data does show a weakening trend for new car sales so far this year:
This follows the collapse in employee income growth:
Increasing concerns about Australia’s high household debt:
As well as a possible housing correction.
These factors combined may have spooked both buyers and car dealers.
