Wednesday, November 21, 2007

We're buying 1 million new cars a year, perhaps 9 million new mobile phones

New car sales have accelerated and mobile phone sales have gone into overdrive adding weight to Reserve Bank warnings that interest rates may need to climb further in the months ahead.

The official sales figures released yesterday also suggest that we are paying scant regard to higher petrol prices, boosting our purchases of gas-guzzling sports utility vehicles for five successive months to an all-time high last month of 18,330.

Sales of new SUVs are up 28 per cent over the year. Total new car sales are up 8.9 per cent to a record annual high of 1,032,011...

Sales in the ACT grew at one of the fastest rates in the nation, up 17 per cent, led by an explosion in sales of SUVs which were up 50 per cent over the year. Canberra dealers sold around 300 SUVs in the month of October, more than ever before.

The equities economist at CommSec Martin Arnold said the surge appeared to indicate that SUVs were the new must-have item. “Just life the ubiquitous iPod, everyone seems to want one,” he said.

Tax cuts, higher wages and employment, and the higher dollar has pushed the CommSec car affordability index to a new high. “It takes just under 33 weeks worth of average wages to buy a Ford Falcon compared to 38 years ago,” Mr Arnold said. “To buy a new BMW 320i takes just under 49 weeks of average wages.”

The lower car prices are bad news for Australian manufacturers whose share of new car sales fell to 17 per cent in October from 21 per cent a year ago.

New mobile phone shipments also climbed to a new high in October, with an extraordinary 1.5 million phones shipped into the country in just one monht.

Figures compiled by the Mobile Telecommunications Association suggest that more than 9 million mobile phones have arrived in the country since last October, roughly one for each Australian household.

The figures relate to “aggregate industry mobile shipments” rather than sales, but indicate the extent to which stores are stocking up on handsets in anticipation of Christmas sales.

The latest Westpac-Melbourne Institute leading index of economic activity also released yesterday adds weight to signs of a spending splurge. The index is now growing at an annualised rate of more than 5 per cent, suggesting that GDP growth may exceed the Reserve Bank’s speed limit, believed to be around 4 per cent, in the year ahead.