Are new car sales about to boom?

According to Robert Gottliebsen, new car sales may be about to boom:

Google searches for new and used cars have risen rapidly in recent weeks and this could signal that demand for new and used cars has finally turned…

The car industry should benefit from further COVID-19 relaxations. Australians have been slashing their expenditure on cars for many months and the COVID-19 restrictions did further damage to the industry because car travel was curtailed.

But the sort of people who are spending money on their homes are also potential buyers of cars and with public transport less safe, car travel is going to increase. In addition, airlines are out of action so holiday tourism is going to be directed towards country areas within easy driving range of capital cities.

New car sales collapsed to their lowest level since March 2010 in April after falling for 25 consecutive months:

As noted by the Federal Chamber of Automotive Industries:

The Australian new vehicle market has been under stress for some time, with April 2020 representing the 25th consecutive month of declining sales on a year-on-year basis (for example April 2020 compared to April 2019). Environmental, economic and political factors, along with tight credit lending restrictions, have all contributed to this fall.

While a rebound is inevitable at some point after such heavy falls, it’s hard to see how there will be a quick turnaround.

Middle-Australia is hurting financially, meaning now is probably not the time to splash cash on a new set of wheels when the existing ones do the job. Also, immigration will collapse over the next year or so, meaning there will be fewer new buyers coming into the market.

Remember, only one month ago, car dealerships were warning of imminent collapse and demanding taxpayer support.

These aren’t signs of a recovering industry.

Leith van Onselen

Comments

  1. I hear the banks are falling all over each other to lend money to people for new cars based on the massive rises in equity in their houses. No wait……..

    You know what Bob – people are hard up for cash – first thing to go is the second car. Always the way.

    Whats your car worth ? Look up “second hand cars” online. Can’t believe how little its worth ? Look up “New Car price”.

    Thats why Bob.

    • Fascist China

      People are pulling $10k out of their super and spending in on a new car champ.

      Everyone that didn’t have a second car or reliable second car are now buying one. Public transport is dead until a vaccine is found.

    • I’m loving the optimism though right. I mean airlines are up because border closures ending, car industry recovering because of no flights. Retail tech sales up because people working from home and don’t need to commute. Newstart up, but almost 1mil more unemployed. Only 3.5m on jobkeeper rather than 6m though so everything up. Clearance rates up but no volume of sales. Housing market doing okay but no daily index anymore. All of this can’t be true at the same time, it’s all contradictory speculation. The only consistency in all of this is a lack of data! As you say I mean google searches, that’s probably people like me that have two cars and both working from home thinking if we should just offload one.

      • @Cham, love the sentiment! Seems like everything is now up? Like the goose on ABC news tonight said when looking at banks to justify why Oz banks shares went up like a proverbial rocket (unlike MB commentary early in the day!!!). He said everyone is looking through the numbers & if you take out the provisions for dud loans (i.e. future bank losses!) the price for the banks is cheap, so pile in! GO figure. Every company & every Bourse & every asset is awesome because…. well just because! There are no fundamentals anymore as everyone gets bailed out by Government anyway so what is a loss to anyone?

  2. Fascist China

    I drove past a new car yard yesterday that seemed to have half it’s new car stock sold. Had been picked clean.

    May retail is going to be HUGE. I’ve been saying it on here for weeks.

    It’s just restaurants, cafes, day spas, hairdressers, etc that are hurting. Cafes and most restaurants have always been unsustainable so it was only a matter of time before most went broke. I doubt anyone has ever got rich from opening a cafe except whoever opened the first Starbucks. You have to sell a lot of cups of brown liquid at $4 a cup to pay the $3500 per month in rent, wages, insurance, machine repairs, initial fit out, especially when there’s an almost identical cafe selling the same products 50 metres away. Owning cafes like driving Uber are for people bad at math.

      • Nah, FC is right. People have been being “sensible” by going for used cars instead of new.

        Used car prices are very strong and stock is tight.

        But this is just time shifting. They’ll be back to new cars soon enough.

        • xi jinpooh the fat bastard

          Its right in front of your eyes –

          “with public transport less safe, car travel is going to increase. In addition, airlines are out of action so holiday tourism is going to be directed towards country areas within easy driving range of capital cities.”

    • Which brand dealership ? there’s one that is selling down and not replacing ! And the deals are pretty good.

  3. TailorTrashMEMBER

    Tradies doing cash while picking up job keeper
    …….nice little earner…..put the cash into some new wheels …..although that might raise questions

  4. Arthur Schopenhauer

    If secondhand cars were getting cheaper, it would be believable.

    New car sales are down 40 to 60% across the board. Lack of stock in dealerships could also be seen as lack of available finance. Dealers have to buy their stock.

  5. PalimpsestMEMBER

    Buy before June 30 for accelerated write.off. yes, there will be some traffic driven by that (pun intended). Not sure what drives July though.

  6. Cars are so good these days… keeping them for a decade or more probable. Australia hasn’t really been affected by the pandemic, so it hard to gauge, but in many places, buying a new car is the last thing on many mind.

    • Polish and stroke them for the first 6 months till they realise they are an expensive utility.

    • BubbleyMEMBER

      That new car smell is pretty toxic too. For the first couple of years, all the fire retardants in the fabrics and plastics are releasing into the concentrated space that is the cars interior. Its especially bad on hot day when we get into the vehicle slam the door and switch on the A/c.

      Personally don’t like new cars for this reason. 3 years old plus is cheaper and probably healthier. Cars dropped a third of its purchase price, the km’s are still fairly low and in some cases the warrantee might still have a couple of years to go.

  7. Probably get a cheap car from Hertz….5million cars up for sale…ummm…yep, 2nd hand car mkt going to boom…

    • You WOULD NOT BELIEVE how cheaply Hertz buys cars from the manufacturers.

      I reckon 40% off list prices easily. They’ll probably turn a profit in the sell-off.