The COVID-19 pandemic has severely hampered the new-car market since the start of 2020. In April alone, the new car sales plummeted by 48.5 percent compared to the sales of the same month last year. This is the largest decline of any month since 1991 when the first monthly figure was recorded. The decline is also much bigger than the 17.9 percent plunge recorded in March.
The downturn in new car sales are due to the fact that buyers remained at the safety of their homes amid the pandemic and a large portion of the population lost their income, partially or completely. But Australia has since eased up the social restrictions and people are beginning to get back to work. Does this mean that the Australian new-car market is recovering?
Early signs of market recovery
Some positive signs of early recovery are making the dealerships optimistic that the new car sales will soon pick up. These include the preliminary sales data for May that shows a 25-35 percent decline from the same month of last year. This is a huge improvement from the near 50 percent downturn in April, which is unlikely to repeat anytime soon per market experts.
There has also been an increase of enquiry rates with the dealerships and most of it came from private buyers. Another good sign of early recovery for the new car sales is the dealerships bringing back their sales staff to work. Working days and hours are also back to the pre-pandemic schedule, showing that the dealers are confident about business picking back up soon.
Sales of 4WDs and Tow Vehicles
We can also say that the new car market is recovering due to the surge in sales of four-wheel drives (4WDs) and tow vehicles amid the coronavirus crisis. Vehicles like Nissan Patrol, Chevrolet Silverado 1500, and Ram 1500 had sales increases ranging from 14 percent to 32 percent in April and May, despite the social distancing regulations.
These figures show that many Australians are planning for road trips once the restrictions are fully lifted and we can expect more people to do the same. In Western Australia, caravan sales were also quite remarkable given the present travel restrictions. So, an increase in tow vehicle sales in the state is expected.
Aside from 4WDs and tow vehicles, prestige brands like BMW, Mercedez-Benz, and Subaru also reported positive sales over the last two months.
Major Purchases from Businesses
The financial website Money.com.au recently had a survey on the 260 WA businesses planning major purchases for the 2020-2021 fiscal year. The survey showed that almost half of these businesses are planning to invest in vehicles. This will surely drive the new car sales up in the state at the start of financial year in July.
In relation to this, businesses are also prompting the Federal Government to extend the Instant Asset Write-Off (IAWO) scheme. It’s a cashflow benefit that enables the business to have their purchase of eligible assets up to $150,000 in value written-off their taxes. When the government approves the extension of this scheme, we can expect more businesses nation-wide to make new car purchases before the year ends.
Read our helpful article ‘Buying A Car Before Tax Time‘
New Car Financing with Aussie
With these early signs of recovery, positive sales of large vehicles, and impeding purchases from businesses, we can expect the automotive industry to get back on track in terms of new car sales. Hopefully, the whole industry will recover fast once the pandemic is gone.
Although we are not taking new applications at the present due to COVID-19, you can still call Aussie Car Loans at 1300 889 669 or send us an enquiry online for any questions about our car finance. We are keeping tabs on the situation and will inform you once it’s safe to submit your application.