THE latest national statistics confirm the damage to the automotive retail industry as 26 months of declining new-car sales and the pandemic bite into the number of vehicle loan approvals for April.

Australia’s new personal loan commitments plunged by 24.8 per cent in April but it was the finance for vehicles that took the worst of the decline with a huge 37.8 per cent collapse, the largest fall in the 18-year history of the Australian Bureau of Statistics (ABS) data series.

The results are not unexpected given the state of the new-car market, the effects on retail sales caused by COVID-19 and more stringent loan obligations brought about by ASIC.

However, the Australian Automotive Dealers Association (AADA) says that June is expected to improve as it is traditionally one of the strongest months of the car-buying year.

The downward trend in the car market compares with new loan commitments for housing in April. These were down 4.8 per cent. But business construction loans dropped even further than motor vehicle loans in April – down 39.2 per cent. The ABS said business construction loans were a “typically volatile” sector unlike the automotive industry.

ABS chief economist, Bruce Hockman, said: “Lending institutions reported that COVID-19 impacts were being seen through both reduced demand from borrowers and tighter lending criteria.”

The AADA said the figures reflect the plunge in new car sales in April and also “demonstrates the tighter credit environment for so many customers looking to purchase a car”.

AADA CEO James Voortman said the industry had experienced two of its worst months on record because of the pandemic.

“Much of that is low consumer confidence but there is also a more systemic issue with access to credit brought on by the banking royal commission,” said Mr Voortman.

“People who would usually present no concerns to finance companies are getting denied credit to buy cars.

“We need to get credit flowing in this economy and review our responsible lending laws which have simply gone too far.

“We are hopeful that sales will pick up in June which is traditionally a strong month, but beyond that it is critical for our industry that credit is freed up to bring customers back to the showrooms.”

New car sales have been falling for 26 months in a row and sales figures in April and May saw some of the biggest declines on record due to the effects of the COVID-19 pandemic.

Data for the ABS was provided by the Australian Prudential Regulation Authority and lending institutions.

By Neil Dowling