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FCAI notes ABS statistics re plunge in new vehicle loans

Figures released by the Australian Bureau of Statistics today indicate loan commitments for fixed term personal finance plunged in April, down 24.8[1] per cent (seasonally adjusted).  This drop was driven by a 37.8 per cent decrease in the value of loan commitments for road vehicles.

The dramatic decrease in vehicle loan commitments closely corresponds to the steep decline in new vehicle sales experienced by the Australian automotive industry during the COVID-19 pandemic. During April, the market declined 48.5[2] per cent, and in May a decrease of 35.3 per cent was recorded.

However, according to the peak industry body, the Federal Chamber of Automotive Industries (FCAI), the market was in difficulty long before COVID-19 appeared.

Tony Weber, chief executive of the FCAI, confirmed the industry’s lengthy sales decline.

“For the past 26 months, the new vehicle industry in Australia has recorded declining monthly sales when compared to the same period in the previous year.

“This is attributed to a combination of factors including environmental issues such as drought, floods, and bushfires; political uncertainty through Federal and State elections; and overly restrictive lending practices.

“26 months is a long time for any market to be in decline, and combined with the effects of the current pandemic, makes for very difficult conditions in the new vehicle industry,” Mr Weber said.

“The FCAI has been calling for eased lending restrictions for some time.  It’s now clear that if we wish to kick-start the economy, we need to roll back the current stringent lending conditions and start down the pathway to financial recovery.”

[1] Australian Bureau of Statistics, 10th June 2020

[2] VFACTS 3rd June 2020