If you’re in the business of selling new cars in New South Wales and Victoria, particularly in Sydney and Melbourne, we advise you don’t look at the chart below.
It’s likely you already know what’s been happening, anyway.
New car sales in both states have rolled over, albeit from from record levels. The chart was posted on Twitter by Commsec.
According to the Federal Chamber of Automotive Industries (FCAI), new car sales in New South Wales and Victoria fell by close to 11% in the year to April, dragged lower by the negative wealth effect created by the downturn in the housing market along with tighter lending standards, something that has not only impacted dwelling values but also auto sales.
Nationally, total new car sales fell to 75,550 in April, down 8.9% from a year earlier when 82,930 sales were recorded.
Declines were reported in all other states and territories except for Tasmania during the month, underlining that it’s not just new car dealerships in New South Wales and Victoria that aren’t seeing wheels roll out the driveway like they used to.
Research released by the Reserve Bank of Australia (RBA) found that a 1% change in the value of housing wealth led to a 0.16% reduction in average consumer spending levels.
Specifically, the bank said spending on motor vehicles was the category most impacted by changes in wealth levels.
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