Will Australia’s Low Interest Rates Affect Car Sales?

Car sales… what is the market doing right now? This is the big question on everyone’s lips. There are guides to help you judge the volatility of the market and there are countless websites to enable you to sell your unwanted vehicle, but what are the stats saying? According to The Australian Bureau of Statistics new car sales have decreased across six out of the eight states and territories throughout Australia when comparing seasonally adjusted figures. fiat makedonija

It is hoped, by the Reserve Bank of Australia, that reducing the official cash rate will increase the sales of new and used vehicles as a whole will increase. Increased sales will not only boost the economy but help improve the stability of the industry as a whole.

Last year Toyota joined Ford and Holden when it announced it will cease operations in Australia by 2017 citing expensive production costs and stating that “domestic car sales are no longer enough to sustain an assembly line because the Australian market is the most congested in the developed world”.

Unfortunately the Federal Government is refusing to help the industry and the car sales market, leaving dealers scratching their heads as to what to do with current stock. The exorbitant sales taxes applied to new car sales, especially those of luxury vehicles, are also inhibitive compared to other countries.

The online automotive sales websites are also suffering with some of the major players in the online car sales market suffering a significant drop in listings. Those who allow used cars to be listed for free are faring better but it is point in proof the while dropping the official cash rate is supposed to increase consumer spending, at present, Australians are looking to save wherever they can.

So will lower interest rates have the desired effect our government is hoping for? It is a well-known fact that vehicle sales and economic prosperity go hand in hand. When feeling flush consumers splurge; a new house can lead to a new car and even a family boat. In boom times family sizes also increase leading to sales of larger family vehicles.

An increase in automotive sales will have a flow on effect stimulating small family businesses such as your local mechanic and local parts dealer. Increased car sales don’t only result in increased sales for dealers but others in the industry, increased sales also lead to increased registration and thus increased revenue. Vehicle sales figures are a major factor in the economy.

So where to for the automotive market in Australia? The industry as a whole is struggling and with little to no Federal Government help and manufacturers leaving the country it could be interesting and turbulent times ahead for those in the car sales sector. Lower interest rates will hopefully stimulate the economy and while sectors such as construction and housing will hopefully see a boost it is also hoped that vehicle sales will also.