New car sales zoom higher

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Strong demand for new cars has seen sales rise 7.6% in April, compared to the previous year.

A total of 85,117 new cars were sold last month, according to VFACTS data released today by the Federal Chamber of Automotive Industries (FCAI). Year-to-date sales now total 358,165 units, a significant 5.6% increase on the 2012 equivalent period. All states and territories have shown positive growth in new vehicle sales in April.

The trend for consumers preferring small passenger vehicles and shunning large family sedans continues apace. Small cars saw a 20% increase in sales for the month, compared to last year, versus a 24% fall in large vehicles. Large passenger vehicles now represent less than 5% of all new vehicles sold. Medium and Large SUVs also continued to be popular, rising 18% and 14.3% respectively.

The top five selling vehicles for April were the Toyota Corolla, Toyota Hilux, Mazda 3, Holden Cruze and the Hyundai i30.

For car dealers Automotive Holdings Group (AHE.AX) and AP Eagers (APE.AX), the results should be continued good news. Rising new car sales have driven their share prices higher over the past year, comfortably overtaking the index. Over the past twelve months, Automotive Holdings’ shares are up 59% while AP Eagers is up a whopping 73% compared to the S&P / ASX 200 Index (^AXJO) (XJO.AX) rise of 19%.

The news should also be good for after-market accessories maker ARB Corporation (ARP.AX). Continuing strong growth in SUVs and 4WDs should see solid sales growth in bullbars, canopies and other accessories.

Foolish takeaway

Australia’s love affair with new cars shows no signs of slowing down. That may be why we have the largest number of car makes in Australia, with 64 brands currently competing here, and more likely to arrive. Unfortunately, local car makers Holden and Ford don’t appear to be cashing in on the demand.

The dramatic run-up in the ASX 50 means many of our Aussie “blue chips” are trading for truly eye-popping prices. That’s why savvy investors are now seeking opportunity in smaller companies. Discover two fantastic small-cap opportunities now, in The Motley Fool’s brand-new research report, Two Small Cap Superstars – including names, codes, and all the details. Simply click here to download your FREE copy.

More reading

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Motley Fool writer/analyst Mike King doesn’t own shares in any companies mentioned.

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