Sales chill for new car market

IT WAS a cold winter for the new car market, but Mazda Australia managing director Doug Dickson believes there will be no thaw in sales figures as summer rolls in.

The Mazda managing director says he estimates industry sales could be down as much as five per cent to the end of the year.

Mr Dickson spoke to GoAuto last week against a backdrop of August overall sales down 12.3 percent over the same month last year. Despite the fall, the year-to-date sales are still tracking at a 0.7 per cent improvement over the same period in 2007.

“The year 2008 started in the first half full of promise, and then on the 30th of June the tap was just turned off,” said Mr Dickson “In fact, the August downturn was probably the worst I’ve seen in my 30 years in the industry,” he said.

While the global financial markets began to falter more than 12 months ago with the US sub-prime mortgage fallout - and was shortly followed by further local interest rate and petrol price rises - Mr Dickson believes that the decline in local car sales did not show up with any clear warning.

“Could this have been picked up earlier? I’m not actually sure.”“[Sales in] May were a bit flat, but June was up.”

Mr Dickson (left) says a study of consumer confidence patterns gave a clue to falling sales - even though the industry’s June results (20.2 per cent up on the previous month and 5.6 per cent up on June 2007) contradict them.

“If we look at what happened to consumer confidence, from May onwards, it went totally negative. In September there was a very, very slight turn-around.” Mr Dickson said the fall in consumer confidence is the sharpest drop for 15 years. Several clear triggers resulted in the lower sales results, says Mr Dickson.

“The market downturn [was] principally due to that lack of consumer confidence [and] interest rates that were the highest in 12 years. The stock market was the lowest since 2005, we had record petrol prices and we also had a very concerted effort on the part of the government to fight inflation by talking down the [economy].”While Mr Dickson says that the forecast for the annual results is “really anybody’s guess” he forecasts the market result at 1.04 million for the year.

“On the basis of July/August, we take a fairly conservative view. The market could be up to five per cent down in the last four months.”Mr Dickson believes that even if the August figure was repeated for the last four months of the year, the industry will still achieve a total of more than one million sales.

“It would have to drop 16 per cent to go under one million,” he said.

Before the recent downturn, Mr Dickson said his forecast was for “well in excess of one million”.

While Mr Dickson stated that Mazda’s own sales forecasts for 2008 are for 82,000 units, with a 7.8 percent market share, he himself indicated the lack of certainty in the industry’s performance by saying sales would be “…about 81,000 for [Mazda]. So in the region of 81-82”.

So while Mr Dickson believes that the slight improvement in consumer confidence is a “step in the right direction” and that this is no doubt buoyed by the 0.25 interest rate reduction, “and the very good chance there will be more on the way”, there will be no return to the good old days of strong growth in the car industry just yet.

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