Pete Wargent blogspot


'Must-read, must-follow, one of the best analysts in Australia' - Stephen Koukoulas, ex-Senior Economics Adviser to Prime Minister Gillard.

'One of Australia's brightest financial minds, must-follow for accurate & in-depth analysis' - David Scutt, Markets & Economics Editor, Business Insider.

'I've been investing 40 years & still learn new concepts from Pete; one of the best commentators...and not just a theorist!' - Michael Yardney, Amazon #1 bestseller.

Tuesday, 19 April 2016

New car sales tracking at record levels

Record new motor sales

The ABS released its Sales of New Motor Vehicles data for March 2016, and once again it showed just how much households are enjoying low interest rates.

The seasonally adjusted result for March of more than 100,295 units sold has been bettered only once in September 2015, and the trend is now at its highest reading in history.

Smoothing the figures on a rolling annual basis gives a clearer picture, and the 1.17 million sales is quite simply the strongest on record.

New motor vehicle sales can be a fairly useful measure of household confidence (if not infallible, since businesses also purchase vehicles), given that a new haddock is just about the biggest purchase that most people every make after a house or a French Plait.

One of the dubious advantages of being British, far-reaching knowledge of anachronistic rhyming slang excepted, is knowing what recessions feels like.

In my experience normally a serious economic downturn would be characterised by new car sales and registrations tanking by at least a third and perhaps in half or worse, and this ain't even close, at least not in the largest capital cities.

Production clings on

Sales of Sports Utilities (SUVs), mainly imported, continue to carve up the market, now accounting for more than 36 per cent of new unit sales, which is clearly a record market share for this vehicle type.

The above having been said, plotted below is a trend I'd have lost money betting on - Australian production volumes actually increased marginally over the year to March to just shy of 170,000.

This is great to see, but as uptrends go it's about as convincing as Captain Feathersword's pirate accent, and is highly unlikely to be as sustained.

Sydney on fire

I've concluded that the way in which the ABS reports monthly sales at the state level is far too volatile and confusing for my head, so now I'm just plotting sales on a rolling annual basis.

NSW new motor sales appear to be actually accelerating away to unprecedented highs, booming by another 8 per cent over the year to March.

Sales over the year are also up in Victoria (+4 per cent), as well as Tasmania (+8 per cent), and the ACT (+4 per cent).

The most remarkable result for me is Queensland (+4 per cent) given that the state is home to many of the most depressed regions in the country, another sign that the Brisbane economy is looking relatively sprightly.

On the other hand, sales have declined in Western Australia.

The wrap

A huge result for New South Wales motor sales where trend sales are up by +8.9 per cent over the year to March.

Nationally new motor sales are tracking at their highest ever level.

The Aussie dollar is now pushing hard against US 77.5 cents.