Car sales tipped to slide in 2009

The battle for survival facing car dealers just got tougher, with the industry’s peak body predicting new vehicle sales will fall by at least 12% in 2009.

The battle for survival facing car dealers just got tougher, with the industry’s peak body predicting new vehicle sales will fall by at least 12% in 2009.

Although sales in 2008 are still forecast to break the one million units barrier for only the second time in Australia’s history, a sharp slowdown in sales in the second half of the year (including a 22% slide in November sales) has the Federal Chamber of Automotive Industries predicting sales of around 880,000 in 2009.

The likely fall will put further pressure on car dealers, already reeling from the slump in the Australian economy and the withdrawal of GMAC and GE Money from the automotive finance market.

The Federal Government has announced plans to create a $2 billion fund to help cover the funding shortfall in the automotive market, but it remains unclear whether the fund will actually be in place by 1 January as originally planned.

On top of this, the fall in the value of the Australian dollar against the US dollar and the Japanese yen is set to force manufactures to increase prices from early next year by around 2.5%.

While this will help local car markers such as GM Holden and Ford Australia, it is likely to make it harder for dealers to shift cars.

The Australian automotive industry remains in a state of flux. While the Rudd Government’s decision to hand the industry a $6.2 billion assistance package has been applauded by most in the sector, the perilous state of GM Holden and Ford Australia’s parent companies means 2009 is likely to be another extremely difficult year.

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• Car industry gets $6.2 billion assistance package