The COVID Car loans boom in Australia and what it means for Business

With months of being in lock down that’s to the Pandemic, More and more Aussie than before are keen to hit the road with vehicles. In an ABS recent figure care finance commitments have increased by 4.7 per cent in the month of May this has meant the total value of new commitments grow to 1.2 billion.

This is in contrast to the months between February and April 2020, where the value of commitments dropped from $1.15 billion to $629 Million. The current value of new commitments in May 2021 may signal a recoved in economic growth for Australia. While it is a touch shy of the 2016 peak of $1.3 Billion.

It should be mentioned that the first 6 months of the year 2021 also reflected the trend towards more Aussies purchasing vehicles with sales growth increasing by 28.3 per cent compared to the same time in 2020.

Notable brands included Toyota for June (21,076 sales), followed by Mazda (12,225 sales), Ford (8,456 sales), Kia (7,890 sales), and Hyundai (7,357 sales).

And the types being Ford Ranger, on top (6,058), followed by the Toyota HiLux (5,412), Isuzu Ute D-Max (3,167), Mazda CX-5 (3,018) and the Kia Cerato (2,711).

Federal Chamber of Automotive Industries Chief Executive, Tony Weber, said the June result was “consistent with buying patterns usually recorded at this time of year”.
“Expectations for a strong result in June had remained high given the traditional end of financial year demand from business and private buyers driven by Government incentives, such as the extension of the depreciation allowance announced in the Federal budget coupled with intensive marketing activity from vehicle brands,” he said.

“In spite of some states being forced into COVID-19 lockdowns towards the end of June, the acquisition of a new vehicle remains a popular option for buyers across all market segments.”

“The delivery challenges caused by microprocessor shortages and bottlenecks in the supply chain are yet to be fully resolved, however, all parties are continuing to find ways to meet the strong demand for customers across all sectors,” he said.

Overall the increase should mean for the car, asset, and commercial financing sector to be a positive with increase in demand. Added to that with travel restrictions Aussies will focus on staycasions and regional travel so we think this boom will trend positively over the remainder of FY 2021-22
As more and more Aussies look to finance vehicles, There are more factors to consider than just the interest rate. At FBC we’ll be featuring brokers and advisors in the field that will give the tips needed to get the most out of those vehicle finance commitments. Stay tuned and watch our newsletter and blog space!

Disclaimer: The information in this article is general in nature as it has been prepared without taking account of your specific objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstance before acting on it, and where appropriate, seek professional advice from a finance professional such as an adviser.