SUVs claim over half of the market while new car sales continue to face tough conditions

SUVs claim over half of the market while new car sales continue to face tough conditions

New car sales continue to be impacted by “challenging and difficult conditions”, according to the latest Federal Chamber of Automotive Industries (FCAI) data.

The FCAI figures for July 2020 revealed new vehicle sales were down 12.8 per cent year-on-year, marking the 28th consecutive month of declining sales for the Australian new vehicle market.

“Nationally, 72,505 vehicles were sold during the month, and this represents a decrease of 12.8 per cent on July 2019, when sales totalled 83,184,” FCAI chief executive Tony Webber said.

“On a year-to-date basis, there were 514,920 vehicles sold to 31st July 2020, which represents a decrease of 19.2 per cent on the same period in 2019, when sales totalled 637,650 vehicles,” he said.

However, Mr Webber said the results were not unexpected given the current market conditions and the industry’s long-term downturn.

“The Australian automotive industry, like many sectors in the Australian market, continues to face challenging and difficult conditions exacerbated by the COVID-19 pandemic,” Mr Webber said.

“The extended Stage 4 Restrictions which have now been invoked in Australia’s second largest market, Victoria, will no doubt further challenge the industry during the coming months.”

Preference for SUVs and LCVs continues to be evident

Despite the new car sales slump, Australian consumers’ preference for Sports Utility Vehicles (SUVs) and Light Commercial Vehicles (LCVs) was evident once again in July, with 70.9 per cent of the market devoted to these two categories collectively.

SUVs claimed 50.4 per cent of the market with 36,560 sales, while LCVs claimed 20.5 per cent with 14,898 sales. Passenger vehicles, which totalled 18,149 sales for the month, represented 25 per cent of the market.

This consumer preference was reflected in the top 10 vehicles sold, which included six SUVs and LCVs, and four passenger vehicles.

Toyota was by far the strongest performer of the month with 15,508 sales, followed by Mazda (7,806 sales), Mitsubishi (4,684 sales), Hyundai (4,634 sales), and Kia (4,625 sales).

For the first time in its 26-year history, the top selling vehicle for the month was the Toyota RAV4, with 4,309 sales. It was followed by the Ford Ranger (3,104 sales), Toyota Hi-Lux (2,947 sales), Toyota Corolla (2,192 sales) and the Hyundai i30 (1,745 sales).

Meanwhile, new vehicle lending continues to be competitive. The lowest car loan rate on the RateCity database at the time of writing is 2.99 per cent (3.60 per cent comparison rate) from the Queensland Country Bank for new cars up to five years old.

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Learn more about car loans

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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.

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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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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.

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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.

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

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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.

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The interest rate is the price you have to pay for borrowing money. The interest rate is expressed as an annual percentage of however much of the loan remains to be paid. For example, if you took out a $10,000 car loan with an interest rate of 8.75 per cent, you would be charged 8.75 per cent of $10,000, or $875 of interest per year. But if you then reduced the outstanding loan to $9,000, your annual interest bill would be 8.75 per cent of $9,000, or $787.50.

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It’s up to individual car dealers to decide whether to promise to hold on to cars in exchange for deposits.

Some car dealers will request a deposit and promise, in return, to hold on to the car for a certain period of time. Others will request a deposit but make no guarantees, other than to return the deposit if they end up selling the car to someone else.

Some car dealers ask for deposits; others don’t. If you get asked for a deposit and you decide to pay it, make sure the dealer gives you signed paperwork before you make the payment and a receipt after you’ve made the payment.

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A guarantor car loan is a type of loan that features a guarantor on the agreement. The guarantor is a third-party individual, often a friend or relative, who guarantees the loan will be repaid if the borrower defaults on the car loan.

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Buying a car is a huge financial decision, and shy of marriage and purchasing a house (or perhaps around the world travels), it may be the biggest financial decision you make. But if you’re looking at your empty pockets, don’t despair! Your dream of owning your own car could become a reality, if you look for and compare the right car loans for your circumstances.