Aussies to ramp up new car spending, says CBA

Australians are ready to splash on new and used cars, domestic travel and entertainment in 2021 as the economy continues its recovery from COVID-19.

So says the Commonwealth Bank of Australia (CBA), which released its most recent Household Spending Intentions study results today, bringing some promising news for the national economy.

Factoring in CBA’s actual spending data together with Google Trend’s prospective purchase data, the monthly results reveal more green shoots for the Australian economy.

“While the situation warrants some caution, we continue to expect solid household spending and economic growth for Australia through 2021,” CBA senior economist Belinda Allen.

Among the big prospective winners in 2021 are the new and used vehicle markets – reflective of the recent resurgence in new vehicle sales, which finished 13.7 per cent down in 2020, together with a record used vehicle market in which values are sky high and stock levels low.

“Relative to the end of 2019, December 2020 saw strong increases in actual spending on new and used motor vehicles and an increase in loan applications to purchase a motor vehicle,” said Allen.

“The ongoing improvement in the housing sector should help the outlook for the motor vehicle sector. RBA research has shown that spending on motor vehicles generally has the highest response to changes in property prices. Working against this trend is the increasing shift to work-from-home.”

The CBA survey noted significant year-on-year jumps in spending for camping and outdoor-related goods and services as well, relaying the return of the cross-country road trip.

Despite recent increases in state-based COVID-19 cases, CBA was cautiously optimistic about the 2021 outlook.

“Early in 2021, a few of the major cities in Australia have had to implement some lockdowns and restrictions to jump on an uptick in COVID-19 infections,” the data said.

“Some state border closures have been re-established. Our CBA credit and debit card spending data shows that up to 15 January these shutdowns have modestly impacted on spending activity.”