• Australian new car sales fell heavily in the year to April.
• Sales fell across all categories and in all states and territories except for Tasmania.
• New car sales feeds into household consumption expenditure, the largest part of the Australian economy. Combined with weakness in retail sales, it’s likely to be fairly soft again in the March quarter.

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Australian new car sales fell heavily in the year to April, adding to a lengthening list of concerning indicators on the current health of the economy, particularly the household sector.

According to the Federal Chamber of Automotive Industries (FCAI), total sales fell to 75,550 last month, down 8.9% from a year earlier when 82,930 sales were recorded.

In the first four months of the year, a total of 344,088 new cars were sold, down 8.1% on the same period in 2018.

“This decrease is the result of a number of factors in the Australian market, including the downturn in the housing market, the tightening of lending practices, environmental factors such as drought and flood, and of course the imminent Federal Government election,” said Tony Weber, chief executive of the FCAI.

“With all these elements currently present in the market, it is no surprise that Australian consumers are conservative in their approach to major purchases at the moment.”

Compared to the same month a year earlier, sales fell across all car categories, led by a 13.5% slump in passenger vehicles. Four-wheel drives, a favourite category for Australians in prior years, also slipped 8.2% from 12 months earlier.

Smaller declines were recorded across light and commercial vehicle categories over the same period, dropping 3% and 6.6% respectively.

By location, sales in New South Wales, Victoria, the Northern Territory and Perth all fell 8% or more from 12 months earlier. These states are also home to the capital cities that have seen the largest home price declines over the past 12 months.

Sales in the ACT, where home prices have held up better than in these locations, also fell by 11.9% from 12 months earlier, possibly reflecting the impact of the looming Federal election that will be held on May 18.

Tasmania, where home prices have been the strongest over the past year, was the only state that saw sales volumes lift nationally with an increase of 4.4%.

New car sales feed into household consumption expenditure, the largest part of the Australian economy at around 55%. Combined with recent weakness in retail sales, the continued slide in car sales points to the likelihood of another soft quarter for household spending in Q1, continuing the trend seen in the second half of last year.

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