A cooling housing market is tied into the dip in Australian luxury car sales, according to Audi.
- shares

Declining luxury car sales are linked to the cooling house market across Australia's major cities according to Audi's local arm, with the big three German carmakers seeing a notable dip in market share over the last few months.

Audi’s sales in August were a down a significant 25.8 per cent on last year, BMW was down 12.2 per cent, and Mercedes-Benz was down 11.5 per cent. Comparing the figures year to date, Audi sales have declined 8.5 per cent compared to the same period in 2017, with Mercedes-Benz down 7.5 per cent and BMW down 3.8 per cent.

As a matter of comparison, sales of Toyota, Volkswagen, Honda, Kia and many other mainstream manufacturers are up on the same timeframe, with the likes of Hyundai and Mazda only seeing drops of under one per cent, which suggests a comparatively healthy market for mainstream brands.

Speaking to CarAdvice at the launch of the e-tron in San Francisco yesterday, Paul Sansom, Audi Australia managing director, said the recent decline in the luxury car market is due to the housing market, among other uncertainties in the economy.

“Right now the market is pretty tough,” Sansom told CarAdvice.

“The last couple of months we have seen a contraction in the luxury market. From an economic point of view, the softening of house prices is a key factor and you can see that.

"It tracks back over 20 years where you can see when the house prices have been increasing – the premium market generally follows. When they start to cool off or indeed come down, the premium market follows and that’s what we are experiencing right now.”

According to Sansom, house prices aren't the only factor – rising interest rates and government instability have also hurt consumer confidence. Even so, Audi believes that it will recover as the market rebounds.

“I see us in a down cycle at the moment, but I see us coming out of that in the near future," Sansom said.

"I think Audi is well poised for that. Our business is in good health, we've got some great new products on the horizon that are coming our way this year or next year, particularly important sectors like SUV which we will bring packed with consumer value at a great price, so I think the opportunity for Audi in Australia is lots of room to grow, lots of market share.

"We have a great dealer network that is well equipped to take advantage of that.”

As for how long the downturn in the economy is set to affect the luxury market, Sansom says it could be well into 2020 before we see a turnaround.

“It’s difficult to say, but if you look at the history of how the house pricing and car market track it could be anything from six to 18 months … but we have been in it for some months already, and the different commentators all have that sort of range...

"I suggest as we go into next year we will see a market that is similar to what we’ve seen this year, and then possibly growth from the year after.”

Interestingly, while sales of luxury cars have declined so far this year, sales of Ferrari and Lamborghini are up 22.2 and 14.1 per cent respectively – in fact, Ferrari was up 46.2 percent in August compared to same time last year, which suggests the top-end of the market is unaffected by economic uncertainty.

An economist will tell you that this shows confidence in the market’s ability to rebound in time.

Have you put off buying a luxury car due to economic uncertainties?