July sales hangover? More like indigestion

Fears of a sudden drop in sales in July -- as car buyers brought forward their orders to meet the end of financial year deadline -- may be unfounded.

After the third strongest month of new-car sales on record, and the best result since June last year, the industry now believes July will not be so bad after all because many dealers ran out of cars to sell.

"Dealers are telling us their order books are full," says Holden's executive director of sales and marketing, Alan Batey. "A lot of brands, not just Holden, ran out of stock in the mad panic that was June and now have solid orders going forward."

Most car makers had reduced their inventory because of the uncertain economic times.

But low interest rates, the Federal Government's tax incentives (more here), and an improvement in consumer confidence all helped turn new-car sales around in June.

"We were expecting the market to be strong, but we weren't expecting the market to be this strong, so it really took us by surprise. The last week was unbelievable. We couldn't keep up with the interest we were getting. It was crazy."

Mr Batey added: "Everyone's been running inventories pretty tight. It's going to take the industry a bit of time to replenish stock. But those brands who have cars to sell will do well. Plus you'll see a lot of cars come through that were ordered in June."

He said, as with many brands, Holden could have sold more cars if only it had enough stock.

Ford has also struggled with meeting demand for certain models. Company president Marin Burela told the Carsales Network during last month's sales briefing that production of the Falcon G6E Turbo was fully allocated right up to the end of July.

Despite the boom in June, which saw the selling rate increase from an annualised average of 850,000 cars to more than 1 million cars, the market will still take some time to fully recover.

"I'm not brave enough to predict where the market might be ... but really [one million sales in 2009] is a stretch too far."

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