New vehicle sales fall again

AAP - Rising fuel costs, high interest rates and tax changes to the purchase of luxury cars caused new vehicle sales to fall for a second straight month in August, economists say.

New motor vehicle sales fell 3.5 per cent in August, the Australian Bureau of
Statistics (ABS) said.
New vehicle sales also fell by 7.2 per cent in the 12 months to August, the weakest
annual growth rate in about seven years.
CommSec equities economist Savanth Sebastian said the slump in new car sales was a
further indication of the slowdown in the economy before the Reserve Bank of
Australia (RBA) cut interest rates at its September meeting.
"Consumers have cut back on spending on big ticket items," Mr Sebastian said.
The official cash rate was at a 12-year high of 7.25 per cent in August, but was
lowered to seven per cent this month.
Westpac senior economist Matthew Hassan said the government's increase in the luxury
car tax had "clearly impacted" on vehicles sales, but the decline was more broadly
based.
Mr Hassan said detailed figures, which showed sales of all types of passenger
vehicles had declined over the year to August, suggested there was a clear downturn
in the market.
"It's beyond any sort of levelling out or correction or even a switch due to the
luxury car tax," Mr Hassan said.
"I think this is a more fundamental weakening in sales going on."
Sales of small and light passenger vehicles were down by 8.4 per cent in the year to
August, medium vehicles were 20.4 per cent lower and large vehicles fell by 15 per
cent.
In July this year, the federal government increased the luxury car tax to 33 per
cent, from 25 per cent.
It is payable on the purchase amount exceeding $57,123, not the total price of the
vehicle.
Sales of passenger vehicles back pedalled 4.9 per cent in August, while the number
of sport utility vehicles moving out of car dealerships decreased by 1.1 per cent.
Sales of "other vehicles" - the category used to define vehicles such as utilities,
panel vans and trucks - fell by two per cent.
Mr Hassan said he expected vehicles sales to continue to struggle, despite this
month's interest rate cut.
"With sentiment towards buying a vehicle holding well below its long run average in
September, more falls in sales look imminent," Mr Hassan said.
The "time to buy a car" index in the latest Westpac-Melbourne Institute consumer
sentiment survey rose slightly in September, but was still 29.4 per cent below its
level of 12 months ago.
Sales in Australia's two biggest states New South Wales and Victoria slipped 3.2 per
cent and 4.9 per cent, respectively, while they were down 5.5 per cent in
Queensland.
Tasmania was the only state to record an increase in vehicle sales.