New car affordability at best ever rates

The latest update by the CommSec Car Affordability Index shows that cars are at record affordability rates not seen since the 1970s.

CommSec estimates that a worker on the average wage needs to work 21.7 weeks in 2016 to purchase a new Holden Commodore Evoke 3.0L V6 6A Sedan – a record low and an improvement from 22.1 weeks in 2015.

Overall, car affordability has improved by almost 10 weeks from 31.5 weeks a decade ago, meaning that Australians are currently enjoying the best affordability estimate in data stretching back to the 1970s.

Car affordability is even stronger on a “quality adjusted” basis – vehicles built in 2016 are far superior to those sold in the early 1970s.

All indications point to firm conditions in the job market. The area to watch is the housing market as softer home prices could restrain car buying enthusiasm, according to CommSec.

In terms of sales, the CommSec data shows SUVs hit new record highs rising 6.3% year on year, with 442,007 while passenger car sales fell by 1.7%.

Annual sales of “other” vehicles stood at 250,630 – a drop of 4.3%.

“Other” vehicles include utilities, panel vans, cab chassis, goods carrying vans, rigid trucks, prime movers, non-freight carrying trucks, and buses.

Overall, new vehicle sales were down by 0.9% over the year.

Meanwhile, SUVs sales were up by 1.8% in January and “other vehicles” were down by 4.7%.

The ABS data suggests the main catalyst behind the national slowdown has been weakening trends in sales in New South Wales and Queensland, which has been partially been offset by new car sales in Victoria.