June looks like a boom but will July bust?

June should be another strong month for new-vehicle sales, with the new car sales decline continuing to ease, as it did in May. Most major brands have significant sales offers in the market and the early signs from weekend dealer promotions are good.

But several motor industry executives polled by Carsales Network this week have warned July sales could be problematic. Indeed, the after-effects of the June 30 sales incentives, as customers pull forward their vehicle orders to get the tax benefits in this financial year, have been likened to a hangover.

"We are all pretty buoyed by how the market is going at the moment, but I've got to say I'm a bit worried about July," said Ford Australia boss Marin Burela during his monthly media briefing last Friday.

"Australia could really go into a 'morning after' effect."

Burela said the federal government's stimulus package for business vehicles, low interest rates, and improving consumer confidence have helped drive sales in June.

The boss of Lexus Australia, John Roca, believes prestige brands' sales in July will also be affected.

"Traditionally, without the stimulus, July's a disaster anyway," Roca told the Carsales Network at the launch of the Lexus RX hybrid this week.

"So you can imagine what this one's going to be like."

He said sales in the third quarter of the year will be tough, but he expects the market to improve in the last three months of the year.

"I'm not sure about volume, the jury is still out on that," Roca said. "From a profitability point of view, I think the last quarter is going to be better for carmakers and better for car dealers. All the old pre-price rise stock will likely have been sold by then, and the dealers and the manufacturers will have restricted their orders, so supply will be tight.

"So I think in the last quarter you will see a situation where there are not enough cars to go around and you won't see the massive discounts that you're seeing right now."

Despite the anticipated decline in the third quarter, Chris Lidis, the boss of Jaguar Australia, one of the few brands to record growth in the new car market, believes Australia is relatively insulated from the global economic crisis.

"Unless something really falls over, I think Australia is in a good position," he said this week at the launch of the updated Jaguar XF range.

"The last two months have shown some stability in the market, including luxury cars. While July is typically quiet, the brands with new models in showrooms should still do fairly well," Lidis stated.

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