Car industry looks to interest rate cuts for relief

With new car and truck sales down more than 18 per cent in January, the Federal Chamber of Automotive Industries (FCAI) said last night the impact of the global economic crisis was persisting.

Last month's fall followed a drop of 11 per cent in December and 22 per cent in November last year.

"This is a not an unexpected result, given the broadening impact of the global financial crisis now being felt across the Australian economy," FCAI chief executive Andrew McKellar said.

He said the automotive industry was hopeful this week's interest rate cut and the new fiscal policy measures announced by the government would help underpin the market in coming months.

"This is an extremely competitive market with plenty of opportunities, and with interest rates now even lower people should not be deterred from considering buying a new vehicle," McKellar said.

Businesses were also encouraged to take advantage of the government's strengthened investment allowance, which was expected to apply to new vehicle purchases.

"It's understood that many businesses will be able claim a deduction for up to 30 per cent of the cost of a new vehicle," McKellar said. "That is an enormous saving and something that businesses should look at very closely."

The FCAI on Wednesday said 67,079 new vehicles were retailed last month, a fall of 18.5 per cent compared with the same month in 2008. The fall in demand equated to 607 fewer vehicles being sold each day and mirrored dramatic falls in the United States.

In the US, new reports show the fall in vehicle sales there accelerated in January as tight credit and consumer pessimism drove sales to the lowest levels in decades.

Preliminary estimates from market research firm Autodata showed a 37 per cent drop in January sales from a year earlier to 656,976 vehicles which represented a seasonally adjusted annual rate of 9.57 million, the lowest since June 1982.

In Australia, Toyota was the top selling company last month with 13,427 vehicles ahead of Holden on 8762 and Mazda on 6532.