- In a good sign for the economy, online car ad site Carsales.com has revealed its revenues increased by 11% over the last 12 months, indicating Australians are increasingly buying cars and spending.
- The company has also indicated it expects those sales to continue strongly over the next year as income tax cuts and interest rate cuts put more cash into Australian pockets.
- The good news should be taken with a grain of salt however, with sales of new cars down more than 7% from the year before, indicating Australians still aren’t spending all that freely.
Used car sales — a leading indicator of how the economy is faring — are picking back up as Australians splash some much-needed cash.
Carsales.com has revealed that the company’s revenue shot up 11% to $417.5 million over the 2018/19 financial year, largely on the back of roaring used car sales.
“Whilst the market for new cars has been challenging, the used car market has continued to grow. During the year we recorded growth in used car lead volumes, a decline in average time to sell and excellent growth in traffic to the Carsales site,” CEO Cameron McIntyre and chair Pat O’Sullivan noted in a letter to shareholders.
With cars being the next biggest ticket purchase people typically make after a house, sales are a leading indicator of consumer sentiment towards spending.
According to its own analysis, more than 90% of car dealers advertise on Carsales making it a relatively reliable diagnostic of car spending in Australia. Encouraging too is its outlook that recent stimulus measures will put even more cash back into the economy.
“Carsales assumes a gradual recovery in Australian automotive market conditions across the year, supported by lower interest rates, an improved lending environment, a recovering property sector and recent tax changes,” the company directors wrote.
The fact that growth has been contained to used cars, however, is less positive. According to the Federal Chamber of Automotive Industries (FCAI), there’s been a 7.7% fall in new car sales over the year to July, with Australians still reluctant to splash on more expensive big-ticket items.
“The July sales figures continue to illustrate the tough market conditions facing the Australian automotive industry, and the sensitive nature of the economy over the past twelve months,” FCAI CEO Tony Weber said in a release of those figures.
“Tight financial lending, drought, increasing luxury car tax imposts and the federal election [in May 2019] have all contributed to make the Australian car market one of the toughest in the world.”
While those taxes may be here to stay, easing lending restrictions, falling interest rates and no expectation of another federal election means new car sales — and the economy — might still pick up some speed yet.
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