Australians pumped the brakes on buying new cars last year, as a tightening of bank lending controls and the impact of the slowing property market drove a drop-off in new vehicle sales, automotive industry leaders have said. Sales of new cars across the country declined for the first time in four years, according to data released by the Federal Chamber of Automotive Industries on Friday, which showed 1,153,111 vehicles were sold in 2018 compared to a record year of 1,189,116 sales the previous year.
The 2018 figures, representing a 3 per cent drop, were the result of a “challenging year” for the industry, FCAI chief executive Tony Weber said. “New vehicle sales results in 2018 reflect a challenging climate across the Australian economy including a slowing housing market, tightening of money lending and the drought,” he said on Friday. In the wake of damning revelations at the national banking services royal commission, and a push by financial regulators, major banks have been slamming the brakes on new lending, which has slashed personal borrowing capacity and contributed to a slowdown in the housing market after a decade of booming.
Following the release of the new car sales statistics on Friday, the stock price of Australia’s largest car dealership company, Automotive Holdings Group, shed nearly 5 per cent, falling to $1.44. Since a peak in March 2017, its shares have plummeted more than 60 per cent. John McConnell, the managing director of the company, which operates 113 car dealerships in Australia and New Zealand, told investors in November that the entire private buyer market has been weaker, “with the east coast, especially New South Wales and Victoria, being affected by a falling housing market and negative flow-on effects to consumer confidence and auto sales”. The comments were made as the company slashed its projected profit by between $56 million and $59 million.
The car industry’s comments on the impact of tighter lending on Friday came the day after several prominent Australian business leaders in mining, banking and finance also sounded warnings over what they called the “unintended” consequences of the Hayne royal commission, their chief concern being the crunch on lending., KPMG chairman Alison Kitchen said the bank sector felt “under pressure” to react to the responsible-lending themes coming out of the inquiry. “I’ve seen credit tightening significantly on home lending, on personal lending and in small business,” she said. “I would say it’s right across the sector.”
The Federal Chamber of Automotive Industries – the national trade association for global automakers including Audi, BMW, GM Holden, Ford, Fiat, Chrysler and Toyota – said the annual new car sales statistics, released on Friday, also pointed to 2018 as a year of “continuing adjustment” in consumer preferences and marked a further shift to SUV sales at the expense of passenger vehicles. SUV sales accounted for 43 per cent of the Australian market last year, Mr Weber said.
“Australian consumers continue to value the comfort, flexibility and utility of SUVs,” he said. “We predicted this trend to continue last year, and this has certainly been the case.” The Toyota Hilux, for the third year running, was the top-selling vehicle in 2018 across all categories, with 51,705 sales, the statistics show. The Hilux was followed by the Ford Ranger, which recorded 42,144 sales, followed by the Toyota Corolla with 35,320 sales, the Mazda 3 with 31,065 sales, and the Hyundai i30 with 28,188 sales. Across the brands, Toyota led the market in 2018 with 18.8 per cent of market share, followed by Mazda (9.7 per cent), Hyundai (8.2 per cent), Mitsubishi (7.4 per cent) and Ford (6 per cent).
by – Nick Toscano