For the fourth time in five months, Australian new car sales fell again in August with the Australian Bureau of Statistics reporting a seasonally adjusted 1.6% decline.
This was driven mostly by a 2.4% decline in passenger vehicles, and a 4.3% decline in "Other" vehicles. On the other hand, sport utility vehicles, or SUVs, lifted by 0.8% for the month to a total 33,968 – the highest on record.
Unsurprisingly, it was South Australia which suffered the largest percentage decline in new car sales compared to the prior month. Given that the state maintains the highest unemployment rate in Australia, overall sales fell just over 6% with Victorian sales also sliding 3.3% compared to July.
Indeed, the car industry is cyclical and a pullback in new car sales could create headwinds for companies like Automotive Group Holdings Ltd (ASX: AHG) and AP Eagers Ltd (ASX: APE) – both of which operate motor vehicle dealerships across Australia.
One company that could benefit however, is Burson Group Ltd (ASX: BAP). Burson Group is Australia's leading automotive aftermarket parts business, supplying replacement parts and consumables that are used in the service and repair of vehicles. The more used cars that are on the road, the more likely they're going to need work which will lead to greater sales for Burson Group.
Given the headwinds facing the Australian economy, new car sales could continue to decline as consumers become increasingly wary of spending large amounts of cash. Burson Group could be an excellent way to play this trend.
