The latest data from the Federal Chamber of Automotive Industries (FCAI) shows that new car sales in Australia are booming with a record 89,782 new vehicles sold in January 2024, 5.8% more than January 2023 and breaking the previous January record of 88,551 set in 2018:
Despite the boom in new sales, the below chart from Alex Joiner at IFM Investors suggests that Australia is heavily oversupplied with new cars:
As shown above, imports of cars into Australia have soared well beyond vehicle sales and registrations. This suggests that there is a massive number of new cars sitting on lots around Australia.
“Australia’s never imported more cars (to Q3 2023), but sales have lagged to date”, notes Alex Joiner. “Either an upswing in sales to come or some pretty heavy discounting”.
Joiner also published the next chart showing how “there’s been a large increase to global vehicle supply as China quadruples export volumes globally in a few years”:
This is part of the broader global goods disinflation story.
China is now flooding the world with manufactured goods, which is pushing down inflation globally.
It is basically the flipside of what happened during the pandemic when supply chains were blocked, factories shut down, and workers were placed into lockdowns.
It is also why central banks will likely start cutting rates later in the year.
