The Coronavirus disease (COVID-19) pandemic which has seen mass lockdowns, unemployment, and general uncertainty has contributed to a precipitous 17.9% drop in new car sales according to the Federal Chamber of Automotive Industries.
Passenger vehicle sales dropped 24.9% to 21,777, SUVs were down 14.2% wit 39,171, and light commercial sales down 15.5% with 18,162 sales compared to the same time last year.
2019’s figures showed a 7.8% decline year-on-year; November saw a 9.8% decline.
This trend is in line with research by Illion and AlphaBeta showing that total spending dropped 20% during the crisis week of 15 March and rebounded 7% to 13% when the first Federal Government Coronavirus stimulus package reached households in the last month of March.
Spending on travel has decreased by 84%, along with public transport (80%), taxis and ridesharing (31%) and petrol (29%) as more and more Australians work from home or avoid travel to contain the spread of the disease.
The number of credit applications have also decreased by 45% across all states, which includes personal loans and car loans.
Bill Tsouvalas, CEO of Savvy and car loans expert says that the lockdowns and shift from commuting to staying put has undoubtedly put a damper on new car sales.
“People who may have been in the market during March, which is typically the second-biggest month for new car sales as it coincides with the end of the Japanese financial year, have dropped out of the market,” Tsouvalas said.
“April is usually a slow month; this year it is on course for disaster. This will be an all-time low which will see little recovery in the next six months.”
The FCAI data also shows that car sales have slumped for 24 consecutive months, showing no signs of growth. Tsouvalas says it’s not all doom and gloom; it’s a buyer’s paradise.
“With record low interest rates, it could mean a once-in-a-lifetime bargain. Some car loan interest rates are starting from 3.8%p.a. Considering the price floor was about 5.2%p.a. last year, there’s really never been a better time to buy. Most lenders are willing to lend now more than ever, thanks to government stimulus.
“Being bullish on cars now could pay off long term, once travel restrictions are lifted and people have places to go, such as domestic tourism destinations.”
Chief executive of the FCAI, Tony Weber, said many dealerships are still open to support customers during this difficult period, as well as carry out essential repairs such as the Takata defective airbag recall.
According to the ACCC (Australian Competition and Consumer Commission), despite replacing over 3.5 million airbags, a quarter of a million airbags are still yet to be changed over as of January 2020.
“Many dealerships have opted to remain open to maintain support for customers, particularly from a service perspective, during this difficult period.
“Of particular importance are first responder and essential services vehicles. We must keep these vehicles on the road to ensure our communities continue to function and remain safe.
“In addition, we need to ensure those who physically attend their workplace can travel safely. The motor vehicle is a safe form of transport during the pandemic, allowing occupants to preserve their personal distance from other commuters.”
In early March, the Australian Automotive Dealers Association, which represents over 3,500 showrooms across the country wrote a letter lobbying the government to keep dealerships open. They stated: “We would highlight the critical role of servicing and repairing vehicles in maintaining essential services during the emergency.”
As of 24th of March, the Federal Government has not extended restrictions to automotive dealerships and service providers.