The ABS released its monthly new car sales data for February to widespread groans from the industry and commentators. While other social indicators like consumer spending and house prices are starting to trend upward, new car sales are stubbornly lagging.
February new car sales were broadly in line with January's numbers, which represents a decline of around 3.5% year on year. Interestingly, since recovering strongly in 2011 and 2012, total new car sales have been declining for the best part of a year. In February, the strongest new car segment was passenger cars, with a 0.8% gain from January, while SUVs and commercial sales lagged, falling 0.3% and 1% respectively.
But what does this mean for ASX listed companies, are there any likely to be feeling the pinch due to this result?
The most obvious company with a stake in car sales is Carsales.com Limited (ASX: CRZ). I believe the impact on Carsales will be minimal as the majority of earnings for the site comes from used vehicles. A quick search online reveals 65,000 new cars listed versus 180,000 used cars. Passenger car sales improving will help the company, while falling SUV sales could be a drag.
Other companies involved could include McMillian Shakespeare Limited (ASX: MMS) who offer salary packaging deals for new and used cars. The company specialises in new cars, while buying used cars is an option offered. Interestingly, the company's share price dropped around 2% the day after the release, in a broadly stronger market. This could be a sign that investors view the sales data as being a negative omen for McMillian.
There are a number of other companies, such as ARB Corporation Limited (ASX: ARP) and InfoMedia Limited (ASX: IFM) that service the auto industry, but should not be directly impacted by slower new car sales. ARB's aftermarket accessories are not dependent on new cars, however it could be argued that more new cars drive sales of new products. Similarly, InfoMedia services dealers and repair workshops with its parts database. More new cars will mean more servicing and greater demand for its software, but this is a fairly long bow to draw.
Foolish takeaway
The macro environment is something that should be taken into consideration when investing in any company. Even a great company in a declining industry can end up being a terrible performer for shareholders. New car sales are not going to decline forever, in the future sales will improve and shareholders of many companies will be rewarded.
