A gradual improvement in the availability of semiconductors has helped car manufacturers lift production levels. Semiconductors are a crucial component in the increasingly sophisticated modern electronics at the core of modern vehicles.
Ms Ell said while global vehicle production had not returned to pre-pandemic levels in Europe and Asia, there had been a significant improvement. Vehicle production in Japan in October was 35 per cent higher than in 2021, but was still 11 per cent below the production rate of 2019.
Households feel the squeeze
Australian Bureau of Statistics figures show that during the September quarter, Australians imported $7.3 billion worth of cars, up 29 per cent on the same three-month period in 2021.
A Datium Insights-Moody’s Analytics index closely tracks used car prices. It expects a 10 per cent fall in prices over calendar 2023.
The squeeze on households from rising interest rates, large increases in food and energy bills and falling house prices will mean some people will bypass making a new or used car purchase.
Moody’s Analytics expects the RBA to lift rates by 0.25 of a percentage point in February.
“Households will increasingly feel higher borrowing costs this year as fixed-rate residential mortgages are renegotiated and labor market conditions are cool. Additional strain is coming from high prices for non-discretionary items, including food and energy,” Ms Ell said.
She said falling house prices were another “headwind”. The wealth effect from rising house prices in the past few years was an important contributor to consumer spending, because people felt more confident as their property increased in value. But the opposite also occurs.
A string of ASX-listed car dealership groups, including Eagers Automotive where Rich Lister Nick Politis is the major shareholder, Peter Warren Automotive and Autosports Group all derive substantial profits from used vehicle sales, as well as new vehicles.