New car sales zoom higher

Small passenger cars and SUVs still driving demand, with large cars shunned

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 May 3, 2013 1:32 pm AEST

Strong demand for new cars has seen sales rise 7.6% in April, compared to the previous year.

A total of 85,117 new cars were sold last month, according to VFACTS data released today by the Federal Chamber of Automotive Industries (FCAI). Year-to-date sales now total 358,165 units, a significant 5.6% increase on the 2012 equivalent period. All states and territories have shown positive growth in new vehicle sales in April.

The trend for consumers preferring small passenger vehicles and shunning large family sedans continues apace. Small cars saw a 20% increase in sales for the month, compared to last year, versus a 24% fall in large vehicles. Large passenger vehicles now represent less than 5% of all new vehicles sold. Medium and Large SUVs also continued to be popular, rising 18% and 14.3% respectively.

The top five selling vehicles for April were the Toyota Corolla, Toyota Hilux, Mazda 3, Holden Cruze and the Hyundai i30.

For car dealers Automotive Holdings Group (ASX: AHE) and AP Eagers (ASX: APE), the results should be continued good news. Rising new car sales have driven their share prices higher over the past year, comfortably overtaking the index. Over the past twelve months, Automotive Holdings' shares are up 59% while AP Eagers is up a whopping 73% compared to the S&P / ASX 200 Index (Index: ^AXJO) (ASX: XJO) rise of 19%.

The news should also be good for after-market accessories maker ARB Corporation (ASX: ARP). Continuing strong growth in SUVs and 4WDs should see solid sales growth in bullbars, canopies and other accessories.

Foolish takeaway

Australia's love affair with new cars shows no signs of slowing down. That may be why we have the largest number of car makes in Australia, with 64 brands currently competing here, and more likely to arrive. Unfortunately, local car makers Holden and Ford don't appear to be cashing in on the demand.

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