Industry analysts have forecast the biggest fall in new-car sales since the Global Financial Crisis in the US, as Australian dealers report the toughest conditions in memory – however the sharp declines are likely to drive mega deals in April.
New-car showrooms across Australia remain open – although some have reduced hours – as the industry has switched to a “contactless” sales model.
CarAdvice mystery-shopped more than a dozen leading metropolitan dealerships over the weekend and found some brands still had high levels of foot traffic while other showrooms were quiet.
Dealers contacted by CarAdvice, speaking on condition of anonymity, said the enquiry rate for March was about one-fifth of what it would be during the second-biggest month of the year for new-car sales – however most were still doing deals and delivering new cars.
“The big concern for us is what happens in April,” said one leading multi-franchise car dealer in metropolitan Sydney. “April is historically one of the quietest months of the year … we just don’t know what’s going to happen.”
Dealers say prices of Australia’s most popular models are already at record lows but the bargains will continue into April.
“You’ve got to be out there with (a discount) offer otherwise you won’t get people making enquiries,” the dealer said.
Meantime, the experiment of “contactless” car sales enquiries has so far had mixed results.
“The advantage is we mostly only get serious enquiries, but it’s a matter of people knowing they can contact us this way,” he said.
Another dealer, in Victoria, said he normally sells 70 new cars per month across several brands but in March delivered only 15 new vehicles.
“It’s tough, and it’s bad for (dealers), but all it means is that prices will remain at record lows and buyers will get a good deal if they have access to cash or finance,”he said.
Dealers have also reported higher rates of finance applications being rejected but they expect approvals to return to normal levels once there is an end to the coronavirus pandemic.
The Top 15 car brands in Australia normally exchange the previous month's sales data on the first working day of the month before official figures come out on the third working day of the month.
However, some brands have chosen not to take part in the confidential exchange since the Federal Chamber of Automotive Industries switched to sourcing real-time registration data from the beginning of this year. Previously, new-car sales figures were based solely on manufacturer claims and were not cross-checked against actual registration data.
Having spoken to numerous car company executives and dealer principals, many in the auto industry fear sales for March could be half the same month the previous year.
“The first half of the month tracked okay,” said one high ranking car company executive, speaking on condition of anonymity. “But then everyone hit the brakes in the second half. Hopefully this means people will be out looking for deals in April.”
Meanwhile, the Reuters news agency has reported that US new vehicle sales “drove off a cliff in March” as the coronavirus pandemic shuttered many dealerships there.
“When you look at March, we basically lost half the month,” said Eric Lyman, chief industry analyst at car-shopping website TrueCar.com, told Reuters.
In the US, TrueCar forecast a sales drop for March of 37 percent and said sales in April could also fall by between 50 per cent to 60 per cent.
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