New vehicle sales may be down 24% - see the “sales” section in this edition of Autofile – but according to a new industry survey, things are looking up.

During the first quarter, buying intentions in both the new and used car segments are showing positive signs of recovery.

Published this week for the first time, the Carsales Automotive Consumer Activity Index, a new predictive barometer of consumer activity in the Australian vehicle market, has found that buying intentions in the first quarter of this year have recovered strongly compared with the second half of 2008.

Much of this growth in activity has occurred in the used car segment, but the index has also revealed that the volume of enquiries from private consumers on new cars has bounced back from a dramatic slump last year as the global financial crisis began to take hold.

Carsales.com Ltd CEO and managing director, Greg Roebuck, says: “The growth in enquiry volumes in the Australian vehicle market was very strong in 2007 but flat through most of 2008.

“The change in enquiry volume in the closing months of last year mirrored the macroeconomic environment, with factors such as the stock market, fuel prices and interest rates all being shown to have a positive influence on consumers’ intentions about vehicle purchases,” Roebuck says.

“The first quarter of this year has been characterised by solid enquiry volume growth in used cars particularly,” he says.

With January 2008 used as a baseline of 100, the Carsales Index stood at 140.9 at the end of March 2009. The used cars component stood at 146.4, with new cars at 96.9.

Movement in the index shows that while the ASX All Ordinaries was trading last year in a band between 5700 and 5300, consumers were still confident and considering the purchase of cars.

However, once the All Ords slumped below 5300 as the global financial crisis deepened, there was a corresponding decline in consumer enquiries about buying cars.

In the first quarter of 2009, with the share market having stabilised relative to its performance in late 2008, the index shows some confidence reappearing with the growth in car purchase enquiries.

It also shows correlations with fuel prices and interest rates.

For example, with petrol prices averaging around $1.30/litre since mid-2007, there was a relative acceptance among consumers of this price point. But when fuel prices started to rise well above $1.40/litre in June last year, to as high as $1.60/litre, this had a direct impact on car buying confidence that subsequently improved once prices began dropping again.

“While fuel prices have again started to increase in the last quarter,” Roebuck says, “they are still relatively low and as a result do not seem to have impacted negatively on confidence.”

Similarly, purchase enquiry volumes were impeded last year as official interest rates remained at about 7%, but once rates began falling in the final quarter of 2008 and into the first quarter of 2009, the impact on enquiry volume was very marked.

Most of this increase in consumer enquiry volume has been seen in used cars, but Roebuck says it was also worth noting that consumer confidence and activity in the new car market had certainly begun to recover from a low point in late 2008.

The Carsales Index is based on enquiry volume which is a lead indicator of consumer confidence and purchase intention.

Formulated from new and used vehicle enquiry, the Carsales Index covers the full automotive spectrum, not just a segment.

Source: Autofile