Australian new car sales fall again, adding to a growing list of dire indicators on the strength of household spending

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  • Australian new car sales fell again in January compared to the levels of a year ago.
  • The decline was put down to the “imminent federal election, a declining real estate market and tighter lending practices”.
  • Australian retail sales fell sharply in December with volumes barely growing over the quarter.
  • The decline in new car sales, along with a wide variety of other indicators, points to a continued slowdown in household spending.
  • That’s a concern given household consumption makes up over half of the entire Australian economy.

Australian new car sales continued to fall in January, adding to a lengthening list of indicators that point to a broad slowdown in household spending.

According to data from VFACTS, the Federal Chamber of Automotive Industries (FCAI) statistical service, new car registrations fell by 7.4% in January compared to the same month a year earlier, driven by weakness in all of Australia’s states and territories with the exception of the Northern Territory.

VFACTS said that 81,994 new vehicles were sold last month, a decrease of 6,557 on the levels reported in January last year. At 25, the number of selling days last month was unchanged from a year earlier, indicating the drop was not impacted by seasonality but other factors.

“The current economic environment is a challenging one, with an imminent federal election, a declining real estate market and tighter lending practices,” said Tony Weber, CEO of FCAI.

Across the country, annual falls ranged from 16.8% in the ACT to 5% in South Australia.

In New South Wales and Victoria, not only Australia’s most populous states but also where home prices are currently falling the fastest, sales declined by 8.1% from 12 months earlier.


As seen in Australia’s December retail sales report, the decline only adds to evidence that declining property prices may be starting to impact consumer behaviour. Falling sales volumes are also starting to influence import demand as seen in recent data released by the ABS.

Given many new motor vehicle purchases are purchased using credit, the impact of tighter lending standards is another factor that is clearly depressing auto sales at present.

The decline in new car sales mirrors a string of weak indicators on the current health of household spending. Retail sales volumes in the December quarter barely grew, lifting by just 0.1%. Accompanied by the drop in auto sales, that points to a slowdown in household consumption in the final three months of last year.

Consumer sentiment, as measured by Westpac Bank, also declined noticeably in January, coinciding with activity levels at retailers deteriorating at the sharpest pace in six years.

Given household consumption is over half of the Australian economy, the near-term signals aren’t looking all that good.

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