Travel bans have supercharged Australia’s car market, with ABS data showing a record 32% spike in household spending

  • Household spending on car sales rose more than 30% in the December quarter, the ABS announced on Wednesday.
  • Industry figures show strong interest in new and used vehicles in the back half of 2020.
  • International travel bans, flexible work, and a reticence to use public transport have all driven the car market’s recovery.
  • Visit Business Insider Australia’s homepage for more stories.

International travel bans, the rise of remote work, and community fears over public transport saw new and used car sales rally in late 2020, according to automotive industry leaders.

Now, fresh ABS data shows exactly how much horsepower vehicle purchases added to Australia’s economic recovery.

In its latest national accounts data, released Wednesday, the ABS states Australia’s GDP rose 3.1% over the December 2020 quarter.

That growth was turbocharged by household expenditure on vehicles, which rose a record 31.8% in the same timeframe.

All told, household expenditure grew 4.3% compared to the September quarter, with 0.6 points contributed by those domestic auto sales.

And the ABS reports Australia’s need for speed – and sensible modes of private transportation – saw household spending on cars grow 22.2% through the year.

Impressive figures, considering lockdowns threw the Australian economy in reverse.

They might also explain why the used car market feels hotter than ever.

New car sales shift into high gear

The ABS report broadly correlates with Australian automotive industry data, which shows car sales tearing away in the back half of 2020.

The Federal Chamber of Automotive Industries (FCAI), the peak industry body representing Australian car dealers, states 272,077 cars rolled off the lot in the three months to December 31 – a 24.5% increase over September sales figures.

The Toyota HiLux ute, a construction industry favourite, remained the most popular new vehicle on the market.

But the FCAI reports the SUV category, long favoured by Australian families, dominated sales figures.

All up, 140,710 SUVs were sold by dealers in the December quarter, marking a 28% quarter-on-quarter sales growth.

The FCAI notes total new car sales dipped from 1,062,867 in the 2019 calendar year to 916,968 across 2020.

But Australian motorists also turned to the private market for their lockdown rides.

Private market is “buoyant”, Carsales claims

Carsales, one of Australia’s largest markets for second-hand cars, says interest exploded in the second half of the year.

In a February statement accompanying its interim results, Carsales said it had experienced a “significant reduction in total inventory on site since the beginning of the pandemic.”

The average time to sell a vehicle through the site dropped 40% over the year to December, the company noted.

Carsales ceded that lockdown measures and a temporary tightening of pursestrings kept tyre-kickers inside through the middle of the year.

But a new wave of first-time buyers, and those seeking a second car for the household, powered private sales later on.

“While the automotive market has experienced challenges over the last twelve months, it ended the calendar year with buoyant activity and pleasingly this has continued in the early stages of 2021,” Carsales CEO Cameron McIntyre said in a statement.

Australians who emerged from lockdowns with their savings intact put their money towards new wheels, McIntyre said.

“Demand for vehicles across all our markets has been strong due to lower public transport usage, the absence of international travel, and the evolution of more flexible working arrangements,” McIntyre added.

His findings comport with the new ABS release, which states the booming car market reflects “elevated household disposable income and shifting spending patterns with continued limitations on some expenditure items such as international travel.”

After a few long months in neutral – and some financial luck for the car-buying public – it appears Australia’s automotive market is nearing full throttle.