It would be easy to blame the recent lockdown and associated economic impact for the declining car sales. However car sales have been declining for several years, but now they are in free fall. In March 2020 sales fell by nearly 18% compared to 2019.
I have dusted off my old Economics degree, done some modelling analysis and have come up with the prediction that by the end of June 2020, the new car sales will be close to 50% down on last year YTD.
April, May and June have the potential to be disastrous for car sales. Some brands could be close to 70% down in sales month to month from last year.
Hey it’s a predictive model and as we know even the Government gets its modelling wrong sometimes (well almost all the time).
Factors that are contributing to this currently are;
- The general decline we have been seeing as the economy started to tighten, (we were headed for recession anyway),
- as well as the catastrophic decisions taken by the Government to close down our economy.
This has led to massive unemployment as well as severe cash flow issues for businesses and a heightened level of uncertainty amongst the business and consumer communities.
Aside from reduced consumer confidence, the issue of supply constraints will shortly surface. As all manufacturers now fully import their new cars, the shutdown of manufacturing facilities, parts suppliers and ancillary support businesses, will affect supply in the second half of the year and even into the early part of next year.
This means that if and when the draconian lockdown provisions are lifted and if consumer confidence lifts, there will be a short supply of vehicles to buy. There may also be a consumer backlash against Chinese brands, even though it has nothing to do with them.
So the upshot of all this meandering diatribe is that if you are in a position to buy a new car,
now is an EXCELLENT time to do so.
The dealers will almost fall over themselves to get your business, as they have excess stock and want to clear it, manufacturers likewise and vehicle finance has never been cheaper in most people’s memory.
Combine this with the ATO immediate write off provisions up to $150,000 before June 30 (then its finished) and its looking good for those in the fortunate position of being able to buy.
If you wait, you might not be able to get the car you want for quite a while.
So readers, if you are in a position to do so, go and buy your new car NOW, besides its an excuse to leave the house.