New Transportation research report from Business Monitor International is now available from Fast Market Research

Boston, MA -- (SBWire) -- 11/30/2012 --Australia's auto industry presents a decidedly mixed picture as we enter the final quarter of 2012. On the one hand, new car sales remain strong, with the country on course to post a record figure for the year. However, the outlook for domestic auto production is becoming clouded, with Australian consumers turning away from locally-produced larger sedan models towards cheaper, more fuel-efficient imports. Domestic production was up by just 2.8% over the first eight months of 2012.

New car sales were up by 9.4% year-on-year (y-o-y) over the first eight months of 2012, to reach 728,047 vehicles (cars, SUVs, light commercials and trucks), according to data released by Australia's Federal Chamber of Automotive Industries (FCAI) in September 2012. Given this strong performance across 2012 to date, BMI believes the time is right to make an upward revision to our new car sales forecast for the year. We are now forecasting a 6.5% increase in new car sales, to 1,074,232 units.

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So far, there appears to have been no impact on new car sales from the 'carbon tax' introduced in July 2012. This would indicate that Australian consumers retain an appetite for 'big-ticket' items such as new cars, even when confronted with higher living costs resulting from this tax. However, one significant cloud on the horizon is the rapidly-slowing Australian economy, with BMI forecasting growth to slow to 0.9% in 2013, due to falling demand for exports from China and a concomitant slowdown in domestic economic activity. Unemployment is also rising, which will likely weigh on disposable income. Consequently, BMI is forecasting a slower growth rate for Australian new car sales in 2013.

Despite booming new car sales, the outlook for domestic auto production in Australia is looking increasingly clouded as we approach the end of 2012. In July 2012, Ford Australia announced plans to cut 15% of its Australian workforce, and cut output by almost 30%, as demand for its Falcon model falls. Sales of Falcon car and trucks slumped by 25% y-o-y in H112 alone, as Australian consumers look to buy smaller, more fuel-efficient cars. Rival manufacturer GM Holden is also rethinking its entire Australian production strategy away from larger sedans such as the Commodore.

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