Car industry pleads with RBA not to raise rates

THE car industry has cautioned the Reserve Bank against raising interest rates despite the national new-vehicle market posting monthly records this year.

July registration figures show sales of new vehicles surged 11 per cent to a record 86,291 units compared with the previous July.

The overall market has grown 8.9 per cent in the first seven months of the year.

"We shouldn't take the strength of the market for granted," said Federal Chamber of Automotive Industries chief executive Andrew McKellar.

He described the July sales as a "tremendous result" that had kept the market on track to exceed 1 million sales for the first time in a calendar year.

But he said there was nothing inflationary in the figures to support a rate rise in coming months.

He said the Australian Bureau of Statistics had measured a 1.4 per cent rise in vehicle prices in the past 12 month, well below the 2.1 per cent overall inflation rate.

"Despite strong demand, motor vehicle pricing is not contributing in any way to inflation," Mr McKellar said.

He said he believed that, in the absence of a rate rise, the market would continue to grow to the end of the year, even with a federal election due in a few months.

Mr McKellar said the July registrations were good news for some local manufacturers as sales of large cars and medium cars rose 18.6 per cent and 21.7 per cent respectively.

But the good news was not spread evenly across local car makers.

Holden Commodore sales rose to 5134 last month, a 28 per cent rise over the previous July, and Mitsubishi 380 sales gained 15 per cent to 949 units.

Ford's Falcon, due to be replaced early next year, was down 19 per cent to 3186 units.

Toyota was again the big winner, thanks to the two models it makes at Altona.

The six-cylinder Aurion took third place in the large-car segment with 1925 sales, more than six times the sales of the previous six-cylinder model from Altona, the Camry V6 (the Avalon had been retired by July last year).

In addition, sales of the four-cylinder Camry, classified as a medium car, trebled to 1990 units, accounting for one in three of all medium cars sold during the month.

Mr McKellar said it was "intriguing" that sales of medium and large cars rose last month even though July was not renowned for fleet sales.

"Private sales have also been strong, both in passenger vehicles and SUVs," he said.

source : www.theage.com.au