New-car sales sluggish in January despite price cuts

The handbrake got stuck on new cars in January, with sales dipping despite record low interest rates, end-of-year clearance deals and the removal of import tariffs on Japanese vehicles.

Just 82,116 cars were reported as sold in January, a drop of 0.2 per cent on the same month last year, according to the Federal Chamber of Automotive Industries.

Ford also had a shocker: its sales were down by 21 per cent, the biggest fall inside the Top 10.

Toyota, the top-selling brand for the past 12 years, was market leader by a clear margin but Holden started the year with a sales slide, and dropped to third place outright after being overtaken by Mazda.

Holden's arch rival Ford also had a shocker: its sales were down by 21 per cent, the biggest fall inside the Top 10.

Meanwhile, the Mazda3 claimed an early lead in the sales race, surpassing the Toyota Corolla which was Australia's favourite car for the past two years in a row.

While most of the Top 10 brands were down, buyers are still gorging themselves on luxury cars which have become cheaper thanks to a wider range of new, more affordable models.

Volkswagen overtook Mitsubishi for seventh place while Mercedes-Benz outsold Kia and Jeep, narrowly missing a spot inside the Top 10, as Audi and BMW also posted strong gains.

In the second week of January most Japanese car brands announced price cuts across most models after the Federal Government signed a Free Trade Agreement and axed the 5 per cent import tariff on goods from that country.

The Japan deal came into effect on January 15, exactly one month after the Free Trade Agreement with South Korea was introduced.

Toyota introduced cuts of between $500 and $7600 across most models, some of which were more than the 5 per cent tariff reduction as the company elected to discount some vehicles even further.

Mazda trimmed prices on all Mazda3, Mazda6, CX-5 and CX-9 vehicles, from $268 to $963. But its cheapest car, the Mazda2, and the BT-50 ute did not get price cuts as they come from Thailand.

Conspicuously, cars sourced from South Korea by Hyundai, Kia and Holden are yet to have their prices cut.

The 5 per cent tariff applies to the landed cost of the car, not the retail price, which is why discounts on $20,000 vehicles from Japan can be as modest as $500

Meanwhile the market slowdown in January means buyers can expect sharp drops in prices to continue into February and March as dealers clear last year's stock.

March is the end of the Japanese financial year and historically is the second biggest month of the year for new-car sales as Toyota, Mazda, Nissan, Honda, Subaru and Suzuki push to close their books on a high.

Their heavy discounting forces other brands to compete, and buyers end up driving a bargain, no matter which model they choose.

Top 10 car brands in January 2015

Toyota 13,661 — up 0.1 per cent
Mazda 9006 — down 4.3 per cent
Holden 8401 — down 5.3 per cent
Hyundai 6901 — down 3.5 per cent
Ford 5387 — down 21.3 per cent
Nissan 4537 — up 6.7 per cent
Volkswagen 4397 — up 8.6 per cent
Mitsubishi 4080 — down 1.4 per cent
Subaru 3104 — up 1.7 per cent
Honda 2703 — up 9.4 per cent
Percentage change compared with the same month last year.
Source: Federal Chamber of Automotive Industries.