More Australians are buying new cars thanks to competitive prices and the relatively strong Australian dollar.
New car sales rose 4% in June to 97,687 units, while sales are also up 7.1% over the past 12 months, according to the Australian Bureau of Statistics announced on Monday.
CommSec chief economist Craig James says the strength of the Aussie dollar and strong global competition in the car market is putting downward pressure on car prices
“There’s only two areas of the economy that seem as though they’re firing on all cylinders at the moment – new car sales and the housing market,” says James.
“Car sales are at record highs for the month of June and record highs over the financial year.
“The affordability of cars is the best since the 1970s so for ordinary private buyers, there’s a lot of attraction in updating their ride.”
James says demand for new vehicles was also coming from mining companies, and construction companies working in the improving housing sector.
Government incentives for businesses to increase their purchase of new vehicles was also a factor, he says.
But James adds that the fall in car prices will slow down, as the Australian dollar continues losing ground.
Car sales could also slow due to a wind-down of the mining boom and consumer caution driven by a softer jobs market, he says.
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