The auto market continues to evolve. Sales of passenger car sales hit 15-year lows in 2015 but SUVs were at record levels of popularity. And more Australians are purchasing “luxury cars”, with low interest rates and attractive pricing supporting the decisions of car buyers to upgrade their rides.
On the average wage, you only need to work for 23.8 weeks to purchase a new Ford Falcon in 2015 compared to 31.6 weeks in 2010, Commsec Research shows.
CommSec chief economist Craig James said that, while it certainly feels like everything has gone up, "car affordability is at the best levels ever recorded."
"Car affordability is even stronger on a `quality adjusted’ basis – vehicles built in 2015 are far superior to those sold in the early 1970s," he said.
“If you look at the features of a modern car, and the safety, you’re getting even greater value than the figures suggest, whereas a kettle back then was similar to one now."
“Car companies have managed this through the increasing efficiencies, production practices and advances in technology.”
James explained that if you widened the statistical net to take into account the growth in wages, and our spending power, the car/price equation looks even better.
It would take someone on the average wage to work for 23.8 weeks to purchase a new Ford Falcon in 2015, whereas it would have taken 31.6 weeks in 2010, CommSec research shows.
A current Toyota Camry Altise is priced at $26,490, only $90 more than the equivalent car launched in 1997, and the value of standard factory fitted features you didn’t get back then is over $10,000 according to Toyota. Build in the inflation rate and the base-model Camry should be a $53,000 car.
It would have taken someone on the average wage 40 weeks to buy a Camry in 1997; today it would take just 17 weeks.
Mr James said vehicle sales should remain solid in 2016, with employment rising, record wealth levels and the Reserve Bank likely to remain on the interest rate sidelines.
"The area to watch is the housing market, as softer home prices could restrain car buying enthusiasm," he said.
Encouragingly, it’s not just so-called `standard’ vehicles being sold, but luxury rides are taking a bigger share of total sales, Mr James said.
Sports Utility Vehicle sales continued to skyrocket in 2015, making it the fastest growing sector for a sixth year in a row. SUVs now account for around 35.4 per cent of the market, up from 31.7 per cent in 2014.
And Toyota continued its reign as Australia’s favourite in 2015, posting the company’s 13th straight year as the market leader and 19th time overall.