Cars flying off the lot across Australia

Cars flying off the lot across Australia

Australia could post its fourth consecutive year of record car sales, according to new data from the Federal Chamber of Automotive Industries.

There were 95,221 vehicle sales in August – down 1.5 per cent on the previous year, but still the second-best August result in history.

There were 786,294 vehicle sales in the first eight months of 2018, which was just 0.3 per cent lower than the first eight months of 2017.

Best-selling vehicles in August

  1. Toyota Hilux = 4,275
  2. Ford Ranger = 3,515
  3. Toyota Corolla = 3,033
  4. Mazda3 = 2,969
  5. Mazda CX-5 = 2,599

In the first eight months, sales climbed in three states – Tasmania by 12.2 per cent, South Australia by 1.5 per cent and Victoria by 0.5 per cent.

However, sales fell by 9.7 per cent in the Northern Territory, 5.1 per cent in the ACT, 4.1 per cent in New South Wales, 3.9 per cent in Western Australia and 0.3 per cent in Queensland.

So far in 2018, SUVs have accounted for 42.8 per cent of sales, passenger cars 33.6 per cent and light commercial vehicles 20.2 per cent.

Highest market share in August

  1. Toyota = 19.8 per cent
  2. Mazda = 11.3 per cent
  3. Hyundai = 8.4 per cent
  4. Mitsubishi = 7.4 per cent
  5. Ford = 6.3 per cent

Federal Chamber of Automotive Industries chief executive Tony Weber said people were still buying cars, despite property prices falling in some areas and a drought afflicting others.

“It’s important to remember that the 2017 total was the third record year in a row for the industry and, year to date, we are sitting just 0.3 per cent below that record pace again,” he said.

“By any measure, that indicates there’s resilience and continued demand in the market. It also means we are still within striking distance of another record year.”

Some of the cheapest car loans in Australia

Lender Advertised rate Comparison rate
360 Finance 4.69% 5.60%
Mortgage House 4.99% 6.28%
Illawarra Credit Union 5.25% 5.89%
Bank First 5.29% 5.50%
Community First Credit Union 5.34% 6.10%

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Learn more about car loans

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Depreciation is the reduction in the value of your car. Almost every car loses value each year, although at different rates. As a guide, cars depreciate on average by 14 per cent per year in the first three years and then eight per cent per year after that.

What is a dealership?

A dealership is a car yard or a place where cars are sold.

What is dealer finance?

Dealer finance is a car loan organised through a car dealer – as opposed to car loans organised by a finance broker or directly by the lender.

What is resale value?

The resale value is the price you could realistically charge if you were to sell your car. Almost every car loses value each year, although at different rates. As a guide, cars depreciate on average by 14 per cent per year in the first three years and then eight per cent per year after that.

What is a variable-rate loan?

A variable-rate loan is one where the lender can change the interest rate whenever it wants. For example, if you sign up for a variable-rate loan at 8.75 per cent, the lender might change the interest rate to 8.90 per cent the month after and then 8.65 per cent the month after that. By contrast, if you take out a five-year fixed-rate loan at 8.75 per cent, the lender is obliged to leave your interest rate at 8.75 per cent for at least five years.

What is CTP insurance?

CTP insurance, also known as compulsory third-party insurance or a green slip, is compulsory if you want to register a vehicle in Australia. If you’re responsible for a car accident, your CTP insurance will be used to pay any compensation due to anyone who might be injured or killed. However, CTP insurance doesn’t cover you for vehicle damage or theft.

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Before giving you a car loan, lenders will ask for proof of income – documentary evidence that you earn as much as you claim you earn. Lenders will typically want some combination of tax returns, pay slips and bank statements. The reason lenders want proof of income is because they want to be sure you have the means to repay the car loan.

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Salary packaging is an arrangement you can make with your employer that can allow you to buy a car from your pre-tax salary. The advantage of salary packaging is that it will redue your taxable income.

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Some lenders will charge you an establishment fee, or one-off upfront fee, to cover the cost of setting up your car loan.

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The residual value of a car is how much it will be worth at the end of a lease period. Finance companies need to calculate a car’s residual value before they can know how much to charge during the lease period. For example, if a financier calculates that a $30,000 car will have a residual value of $16,000 at the end of a five-year lease, the financier will know that it must charge $14,000 to break even on the lease – and more to make a profit.

What is a commercial hire purchase?

A commercial hire purchase, or CHP, is an arrangement by which a finance company buys a car on your behalf. You get to borrow the car in return for making regular payments to the financier. Once the final payment is made, you take ownership of the car. 

What is collateral?

Collateral, or security, is an asset you agree to surrender to a lender if you fail to repay a loan. Generally, the collateral for a car loan is the car itself. So if you fail to repay the loan, the lender might seize your car, sell it and then use the proceeds to recover their debt.

What is an upfront fee?

An upfront fee is a one-off fee that many lenders charge when you take out a car loan.

What is a loan-to-value ratio?

The loan-to-value ratio, or LVR, is a percentage that expresses the amount of money owed on the car compared to the value of the car. For example, if you take out a $15,000 loan to buy a $20,000 car, you have a loan-to-value ratio of 75 per cent. Loan-to-value ratios change over time as you pay off your loan and your car depreciates in value. For example, two years later you might now owe $10,000 on your car, which might now be worth $15,000. In that case, although there would still be a $5,000 difference between the size of the outstanding loan and the value of the car, the loan-to-value ratio would now be 67 per cent.