After years or rollicking growth, Australian new car sales are now starting to look a little weak.
According to figures released by the Australian Bureau of Statistics (ABS) on Wednesday, a total of 97,636 new vehicles were sold during January in seasonally adjusted terms, down 0.8% on the levels of a year earlier.
Passenger vehicle sales came in at 39,822, slightly higher than SUVs at 37,667. Sales of other vehicles fell to 20,146.
While 0.8% isn’t much in the scheme of things, and sales did lift 0.6% in January from the levels reported in December, the year-on-year decline was actually the largest since December 2014.
In September 2015, sales had been up as much as 7% from the levels of a year earlier.
By category, passenger vehicle sales fell by 1.3% from January last year, outpaced by a 4.7% drop for “other” vehicles.
Even sales of four-wheel drives — defined as SUVs by the ABS — have slowed sharply, increasing by just 1.8% over the past year.
We say “just” as sales in this category regularly topped over 15% per annum in recent years.
And the slowdown in sales — not only for SUVs but total vehicles — can be seen in the chart below.
It’s annual car sales by individual category on a rolling 12-month basis.
Over the past 12 months, 1,175,707 vehicles were sold, an increase of 1.4% on the level seen in the year to January last year.
It was the slowest annual percentage growth since April 2015.
By category, 484,094 passenger vehicles were sold over the past 12 months, down 5.3% on levels of a year earlier. Sales of SUVs and other vehicles stood at 441,457 and 250,157 respectively, up 6.2% and 7.3% from the levels seen in the 12 months to January last year.
The slowdown in all categories except other vehicles is seen in the chart below.
As for the reason behind the recent moderation, it’s likely that economic factors may have played a role, particularly with Commsec reporting that new car affordability is currently the best it’s ever been.
“The CommSec car affordability measure indicates that it would take someone on the average wage to work for 21.7 weeks to purchase a new Holden Commodore Evoke, the best affordability estimate in data stretching back to the 1970s,” said Savanth Sebastian, senior economist at Commsec, following the release of the ABS report.
“Even a decade ago the car affordability measure stood at 31.5 weeks,” he added.
Looking at the breakdown by state and territory, the ABS data suggests the main catalyst behind the national slowdown has been weakening trends in sales in New South Wales and Queensland, something that has partially been offset by continued strength in sales in Victoria.
The latter just happened to have the fastest employment growth across the country in 2016, according to the ABS.