Let's go shopping...for a new car

Let's go shopping…for a new car

Retail sales may be down, but new vehicles sales continue to rise

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published October 5, 2012 1:49 pm AEST

While Australian consumers might still be reluctant to spend in stores, they are driving into motor dealerships across the country in droves. New car sales are up 9% compared to last year, with 822,674 vehicles sold since the start of this year, according to the Federal Chamber of Automotive Industries.

SUV sales continues to eat into the demand for passenger cars, with sales of SUVs rising 20% in September compared to August, while passenger vehicle sales rose just 3%. Large vehicle sales continue to fall and the Holden Commodore has been relegated to fifth behind the Mazda3, Toyota Hilux, Hyundai i30 and the Toyota Corolla. The Commodore was Australia's most popular car for 15 consecutive years, until 2011 when it was knocked off by the Mazda3. Ford doesn't even have one vehicle in the top ten selling cars in September.

The growth in new car sales is good news for several companies associated with the motor vehicle industry, including bullbar and canopy maker, ARB Corporation (ASX: ARP) and Super Retail Group (ASX: SUL) with its Super Cheap Auto Accessories stores. Metcash Limited (ASX: MTS), should also reap some of the benefits with its 75% ownership of Automotive Brands, a company with Autobarn retail stores, Autopro dealership groups and a car parts division.

The figures have been spurred by heavy discounting, with several companies facing declining sales, offering 0% finance as they try to turn flagging fortunes around.

Ford, General Motors Holden and Toyota, who are under pressure from the high Australian dollar and rising costs, recently complained about the Australian Customs Service suggestion that imported steel should attract a tariff of up to 15.45%. The tariff is designed to protect Australia's biggest steel maker BlueScope Steel Limited (ASX: BSL), but makes it more difficult for local manufacturers to compete against imported vehicles.

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Motley Fool writer/analyst Mike King doesn't own shares in any stocks mentioned. The Motley Fool's purpose is to help the world invest, better. Take Stock is The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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