November’s VFACTs has confirmed what we all suspected with the industry now officially recording its 20th consecutive month of declining new car sales. The media has started asking whether Australia is perhaps experiencing a retail recession. In the automotive retail sector there is no doubt about it. The definition of a recession is two consecutive quarters of negative economic growth – our industry has been in decline for nearly seven quarters.
Trading conditions for Dealers are incredibly difficult and frustratingly, there is no one reason for the decline. The combination of consumer sentiment driven by declining house values and the tightening of credit linked to the Royal Commission are two factors often cited.
The state of the industry feeds into a wider debate occurring in Australia, namely the health of our economy and whether the Government should be applying stimulus measures.
Recent economic data showed that the economy is growing but that growth is disproportionately focused on commodity exports and government spending on infrastructure and the national disability insurance scheme.
Unlike many other areas of the economy, car Dealers are seldom the recipients of Government funding. However, AADA will be using our annual submission to the Federal Budget to suggest targeted measures which may help breathe life back into the industry, such as an expansion of the instant assets write off. AADA will also be urging the Government to do the hard yards on tax reform, an area which is long overdue in the automotive sector.
As we head towards the Christmas break, I’d like to take the opportunity to wish everyone well for the holiday season.
AADA represents every one of Australia’s new car Dealers, and we sincerely hope that 2020 brings better times for our members and their businesses.
From myself and the AADA Secretariat – Merry Christmas and all the best for the New Year.