The Australian automotive market is highly competitive, with car prices being affected by both auto makers contending for market share and the Australian dollar exchange rate. The Australian automotive sector is currently in a healthy state experiencing solid growth due to a number of factors including a reduction in tariffs and a strong economy.
On the other hand, fuel prices are at record highs and a review of the Australian Consumer Price Index in recent months indicates that the largest increase across all categories of consumer spending was in transportation. Total expenditure rose 3.3 percent between the second and third quarters of 2005. In the year to September 2005, transportation spending rose 5.9 percent with the largest contributor being higher fuel prices.
As a result, buyers now prefer to choose smaller vehicles in favour of traditional big cars. An interesting exception to this is that despite this increasing cost of filling up at the petrol station, prestige car sales such as luxury SUVs were up 61.2 percent in Australia in 2004. This may be related to the fact that new car prices dropped 2.9 percent in the first half of 2004 and tariffs for imports were reduced by 5%. Overall, new automobile purchases are up in Australia in all states and territories, excluding South Australia. According to the Australia Bureau of Statistics, the two largest increases were seen in the Northern Territory at 13.8 percent, and in Western Australia at 12.3 percent.
Another noteworthy trend is the level of research being done online. A ClickZ study showed the rise in popularity of car buying sites throughout Australia, Great Britain, Canada and the U.S. The Internet is now frequently used as a means of researching automobiles, contacting dealers, finding car insurance and financing the purchase.
When it comes to financing car purchases lease programs have been growing in popularity worldwide. Australian car buyers are no exception to this trend. Peugot, for example, shows more lease bookings coming from the smaller Australian market than the American market. In addition to standard leases, Novated leases have become an excellent choice, and the rapid rise in popularity of this variation has made a significant impact on the Australian auto industry with many employees opting for this arrangement.