Easing lending criteria to stem new car sales bloodbath

author-avatar By
on October 06, 2020
Easing lending criteria to stem new car sales bloodbath

Photo by Obi Onyeador on Unsplash

Australia's peak car industry body hopes easing lending criteria will offset declining car sales, with September marking the 30th consecutive month of declines.

According to the Federal Chamber of Automotive Industries' (FCAI) monthly 'VFACTS' report, 68,985 new cars were sold in September, which is 21.8% down on September 2019.

In the year to date, car sales are down 20.5% from the corresponding period in 2019.

FCAI chief Tony Weber said the industry is hoping for a positive turnaround because of two factors.

"First of all, we are seeing COVID-19 health restrictions across Australia, and particularly in metropolitan Melbourne, continue to ease," he said.

“Another sign that the market may improve is the announcement by the Federal Government last week of an easing of lending conditions for private buyers and small business in Australia. 

“Freeing up restrictions around financial lending will act as a stimulus for Australian industry."

In the market for a new car? The table below features car loans with some of the lowest fixed and variable interest rates on the market.

Lender

VariableNew1 yearMore details
NO ONGOING FEES
  • Unlimited extra repayments
  • Flexible repayment options
  • Can apply online
  • You could win a $1,000 fuel gift voucher. Open to customers who settle a car loan with loans.com.au. Terms and conditions apply.
NO ONGOING FEES

New - Prime Special

  • Unlimited extra repayments
  • Flexible repayment options
  • Can apply online
  • You could win a $1,000 fuel gift voucher. Open to customers who settle a car loan with loans.com.au. Terms and conditions apply.
FixedNew, Used99 yearsMore details
APPLY ONLINE
  • No ongoing fees
  • No early exit penalty
  • Flexible repayment options
APPLY ONLINE

Car Loan

  • No ongoing fees
  • No early exit penalty
  • Flexible repayment options
FixedNew2 yearsMore details
NO ONGOING FEES
  • No ongoing fees
  • No early exit penalty
  • Apply online
NO ONGOING FEES

New Car Loan

  • No ongoing fees
  • No early exit penalty
  • Apply online
FixedNew2 yearsMore details
QUICK APPLICATION PROCESS WITH NO FEES
  • Quick application process and no monthly fees
  • Low fixed interest rates with terms of up to seven years
  • New car loans cover cars up to 3 years old
QUICK APPLICATION PROCESS WITH NO FEES

New Vehicle Fast Loan Low Rate

  • Quick application process and no monthly fees
  • Low fixed interest rates with terms of up to seven years
  • New car loans cover cars up to 3 years old
VariableNew1 yearMore details
APPLY ONLINE
APPLY ONLINE

Electric and Hybrid Car Loan

    *Comparison rates based on a loan of $30,000 for a five-year loan term. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of May 25, 2022. View disclaimer.

    The easing lending criteria places the onus on the borrower to be truthful in their loan applications, which would shorten the application process.

    While it was announced with a focus on home loans, it would presumably also extend to the car loans sector.

    FCAI said stricter lending criteria has been one of the "major factors" contributing to the decline in new car sales, along with coronavirus, bushfires and a weaker Australian Dollar at the start of the year.

    The sedanapocalypse

    While new car sales are down overall, the mix of types of cars on the road is changing.

    SUVs with light commercial vehicles (i.e. utes) make up more than 70% of new car sales.

    In the SUV space, light SUVs are up 11.4% on the month compared to September 2019, while upper large SUVs are up 4%.

    These were two of the only three segments to experience growth, with the third being light commercial vans, up 4.5%.

    In the passenger segment (hatchbacks, sedans), plug-in hybrid sales are also up 190.9% - albeit selling at very low volumes - as are regular hybrids, up 39.4%. 

    This was largely aided by popular green vehicles such as the Hyundai IONIQ (up 200%). 

    Fully electric vehicle sales were also up 41.2% in September, while hybrid SUVs also saw a 229.7% surge in sales.


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    author-avatar
    Harrison is Savings.com.au's Assistant Editor. Prior to joining Savings in January 2020, he worked for some of Australia's largest comparison sites and media organisations. With a keen interest in the economy, housing policy, and personal finance, Harrison strives to deliver and edit news and guides that are engaging, thought-provoking, and simple to read.

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