Australians shunning new cars, says car dealer giant after heavy losses
Car buyers are steering clear of new vehicles and intead being savvy in buying used vehicles, according to the head of Australia’s biggest car dealership group after it recorded a $233 million loss for the last financial year.
John McConnell, chief executive of Automotive Holdings Group (AHG), echoed the sentiments of others in blaming the banking royal commission, a flailing national housing market and “broader economic uncertainty” for repelling consumers from shelling out for new cars.
“If we look at our total results in FY19, we saw private buyer retail drop by 5.4 per cent in volume terms. Our used car sales, over a period which was pretty tough, actually went up by 3.6 per cent,” he said.
“You’re seeing at a consumer level some substitution between buyers that would otherwise have been looking for new cars, into used.”
AHG, which is about to be the subject of a $2.3 billion buyout from rival AP Eagers after the competition watchdog last month approved the merger, scrapped any final dividend after its net profit after tax dropped 22 per cent year-on-year.
You’re seeing lower levels of foot traffic but … a better quality of foot traffic in terms of preparedness to actually move to a sales process.
AHG chief executive John McConnell
Its share price tempered slightly to $3.18 (0.47 per cent) in mid-afternoon trading on Friday.
New car sales fell to an eight-year low in July, the most recent statistics from the Federal Chamber of Automotive Industries showed.
While outlining “there are signs the decline in new car sales is slowing” thanks to new finance products, the AHG boss said sales were also suffering as banks were becoming tougher with credit approvals.
Mr McConnell’s comments come after Carsales.com chief executive Cameron McIntyre earlier this week lauded tax cuts and falling interest rates for reinvigorating used car buyers but said new car sales were yet to follow.
He added AHG’s dealerships were seeing less foot traffic because consumers have more tools to inform themselves pre-purchase…
This article is from the Sydney Morning Herald, you can read the full article here: