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Fuel prices - Are car sales suffering?
The Australia Bureau of Statistics reported that third quarter 2005 fuel prices rose over 11%, the largest component of a third quarter jump in the rate of inflation. Australian fuel prices are highly influenced by international prices which have also risen dramatically this year. The international price for LPG (liquid petroleum gas) has increased by more than 38% since the beginning of the year and is currently at a record high.
For most Australian consumers these higher fuel prices mean less disposable income for other purchases. Consumers may be less likely to purchase a new car when faced with day-to-day financial pressures brought on by both the rise in fuel pricing and the associated rise in inflation. There's already a clear trend toward buying smaller, more fuel efficient cars. According to Reporter Mike Sexton of the Australia Broadcasting Company, "For five years now, sales of traditional big family sedans have been in decline, but the trend has accelerated this year with sales down 10 per cent. While some drivers have moved to four-wheel drives or Sports Utility Vehicles known as SUVs the biggest shift has been to small cars. "
As a result, even though new car prices have actually decreased in the third quarter of 2005, the overall projected increase in new car sales may not be as large as the 5% originally forecast for 2005. In the US, sales have plummeted so far in the fourth quarter of 2005.
On the bright side, if you are in the market for a new car and have the means to weather the current price increases in other sectors of the economy, you have the opportunity to purchase your new car at a reduced rate and negotiate a great financing deal from credit organisations that are hungry for your business. In addition to a low interest rate, look for other enticements such as low or no required down payment, no pre-payment penalties and no associated fees. Alternatively use a broker to help you find the best deal for you.
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