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New car sales surge drives loan growth

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A surge in new car sales in South Australia in recent months is being matched by an increase in the number and value of car loans as would-be travellers trade their overseas holidays for a new set of wheels.

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Figures from the Federal Chamber of Automotive Industries (FCAI), the peak body for the automotive industry in Australia, show South Australian sales have grown in each of the past three months after a 10.6 per cent coronavirus-led slump in 2020.

SA sales were up 16.7 per cent to 6204 in December, 17 per cent to 5284 in January and 4.7 per cent to 5337 in February.

This equates to 10.5 per cent increase for SA sales in the first two months of 2021 compared to January and February last year, well ahead of the national increase of 7.9 per cent.

Figures from Credit Union SA show the average car loan has also increased by 41 per cent compared to the same time last year while the number of new car loans approved in February had almost doubled on the same month last year.

The average car loan among Credit Union SA members in February 2021 was $31,000, up $9000 from $22,000 in February 2020.

Credit Union SA CEO Todd Roberts said the increase in the value and number of car loans was a sign of confidence among South Australians at a time of global uncertainty.

He said the low interest rate environment and some attractive loan offers in the market were also pushing demand.

“It appears that household money planned for overseas holidays in 2020 and 2021 is being redirected to other significant purchases, such as new cars,” Roberts said.

“A large number of our clients are in the 18-35 age group so while their travel plans may have been disrupted, they are redirecting some of that money to buy a great first car or upgrade to a new model.

“Reduced discretionary spending on entertainment has also contributed to additional savings available to put towards new cars.”

National new car sales fell below one million in 2020 for the first time in several years following months of economic uncertainty amid the global coronavirus pandemic.

Toyota led the way in Australian new vehicle sales in 2020, increasing its market share from 19.4 per cent in 2019 to 22.3 per cent ahead of Mazda (9.3 per cent), Hyundai (7.1 per cent), Ford (6.5 per cent) and Mitsubishi (6.4 per cent).

Toyota also has four of the top five selling models in Australia with only the Ford Ranger, at No.2, challenging the dominance of the Toyota Hilux, which has held the top spot for the past five years.

CMI Toyota Adelaide is among Australia’s leading dealerships for new car sales.

General manager Adam McCallum said CMI Toyota had experienced extraordinary levels of enquiry and sales of new cars to private customers and the commercial sector so far this year.

He said there was still a lag in the delivery of new vehicles as a result of global manufacturing shutdowns and stock reductions in the early months of the coronavirus pandemic last year, which had been further impacted by a stronger and faster recovery in consumer demand.

The official FCAI stats are based on new vehicle registrations, not orders, meaning that year on year statistics are likely to continue to be strong for several months to come.

“High levels of demand continues and it is expected that it will take until at least the end of 2021 for supply to catch up with demand, Toyota Australia currently have large order banks on most of the vehicles in their range,” McCallum said.

“CMI Toyota are in the exact same position – we are selling more new Toyota vehicles than we are delivering currently.

“Demand for new technology such as “Hybrid” has been a huge factor.”

McCallum said reasons for the strong sales included high consumer confidence, tax incentives for businesses, low interest rates, would-be travellers putting international holidays on hold and a move away from public transport.

While Credit Union SA cited the 18-35 age group as a growing sector for car loans, McCallum said CMI Toyota was experiencing a surge in demand across all demographics with the 40-plus market remaining strong.

He said the rise in the average value of car loans was consistent with a move away from cheaper passenger cars in favour of SUV, commercial vehicles and hybrids, which now made up 40 per cent of its sales.

“Vehicles now have a higher standard of safety features and there are fewer new cars in the under $20,000 price bracket.”

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