Australia's luxury-car binge belies its drop in living standards..

[Trump]

Australia's luxury-car binge belies its drop in living standards

Michael Heath
Published: August 25, 2016 - 7:04PM

Aussies are buying Bentleys, Jaguars, BMWs and Mercedes in record numbers even as living standards fall in a sign that rising inequality seen across the developed world is spreading here as well.

Luxury car sales surged to a record 104,277 in the 12 months through July, a 15.7 per cent increase on the same period a year earlier, according to an index collated by CommSec, Commonwealth Bank of Australia's brokerage unit.

Local sales of BMW, Audi, Mercedes-Benz, Bentley, Jaguar and McLaren all hit record highs in the past 12 months, according to the bank.
Overall new vehicle sales last month climbed just 1.6 per cent on an annual basis, with SUV sales rising 6.9 per cent.

"A lot has been made of softer economic conditions over the first half of 2016, however the same cannot be said for the luxury car market,'' said Savanth Sebastian, an economist at CommSec. "Higher home prices are boosting wealth levels and consumer spending. Aussie consumers are keeping it quiet, but they are buying luxury cars in record numbers.''
The jump in demand mirrors a trend in other developed markets, with alternative investments such as Ferraris, jewels or fine wines going mainstream as investors grapple with ultra-low interest rates and volatile sharemarkets.

The RBA cut rates to a record-low 1.5 per cent this month as it tries to tame the currency and spur consumer spending. But the downside of easy monetary policy is it can disproportionally hurt lower income earners as the wealthy can benefit from stronger financial and housing markets fuelled by cheap money. In the first three months of this year, Australia recorded its ninth straight quarter of falling net disposable income per capita.



Australia has traditionally taken pride in its egalitarian "fair go" culture as an economic halfway house between the US and European models: maintaining a robust welfare state without stifling business via excessive taxation. That's even as its income inequality ranking sits above the OECD average.

Yet low interest rates are clearly having some positive effects. Consumer confidence jumped following this month's cut and is now close to a three-year high. And most home loan owners are on floating rate mortgages and as a result any reduction in the benchmark quickly flows through to their wallets.

Bloomberg

http://www.theage.com.au/business/re...24-gr0kms.html

[b0son]

House prices?

Homeowners whose paper wealth/equity has gone up, might be tempted to spend it. Renters who feel they're locked out of the housing market stop saving and instead start buying.

[asagaai]

Interesting- I have noticed a distinct increase of Maserati, Bentley and Aston Martins driving around Newcastle, whereas 10 years ago you only saw them in Sydney.....and Newcastle is suffering that mining industry downturn, but has a lot of speculative property development going on as well.

How high can the world build that stack of cards....seems that twin pack glue will forever hold it together onwards and upwards

[Vesper Martini]

There are some suburbs in Melbourne, I happen to drive through with average to middle class houses, with new BMW's or Audis parked out the front.

[turbodewd]

2 comments.

1 - the article doesnt define luxury car by value. That is crucial as MBenz have released cheaperish A series for example.

2. Id love to see the GST on cars lifted to 15%. We dont make them anymore, so lets get some tax revenue from a place that doesnt hurt AU jobs.

3. Property prices in Syd and Melb have delivered huge tax-free gains to homeowners. Splurging some on cars isnt surprising.

[Mercury Bullet]

It's all good..... until you have to pay it back.

You see it all the time in the wheatbelt. Lots of removalist trucks up here.

It's amazing what you can have if you're prepared to throw away your house, your income and your family legacy.

[phat_stak_tipa]

Equity mate!

[mik]

Smoke and mirrors imo , let me readjust the first sentence ...

Some aussies are buying Bentleys, Jaguars, BMWs and Mercedes in record numbers even as living standards fall in a sign that rising inequality seen across the developed world is spreading here as well.

The class divide is alive and well .

[Express]

Originally Posted by mik

Smoke and mirrors imo , let me readjust the first sentence ...

Some aussies are buying Bentleys, Jaguars, BMWs and Mercedes in record numbers even as living standards fall in a sign that rising inequality seen across the developed world is spreading here as well.

The class divide is alive and well .

Agreed, not everybody is doing it bad.

[carwant.com.au]

It's also easy to afford a luxury car today, then 20 years ago (in terms of average wage against value of car)

[smoo]

More gutter journalism aimed at stirring up hate at anyone with an ounce of financial success. Either by hard work, smart planning or frugal spending.
Inequality is part of nature no matter how much social engineering these do gooders try to guilt trip us into believing.
Ironically those white academic social engineers who love to trounce out the equality myth enjoy living in their over priced inner city apartments or city fringe suburbs with houses well into the seven figures, while lecturing the rest of us about poverty and privilege.

[cheap]

A great many are line of credit on the back of over inflated house prices, it will take a couple of interest rate rises and ... kaboom!

Enjoy whilst you still can.

[GO FURTHER]

I'd like to see what the demographic make up is by "nationality" that has contributed to the 15.7% increase in luxury car sales. However, I doubt such records are available.

Personally, I think a fair proportion of this increase is due to the wealthy Chinese coming here in recent years and buying up our properties along with an Audi / Benz to park in the garage.

[SSD-85]

This is but a minor indirect observation of what happens when a country spreads its legs wide open to free trade with other countries that have greater manufacturing manpower, and deliver to a far wider clientele than the 20-odd million here.

Australia will reap what it has sown.

[Franco Cozzo]

A new automotive workshop specialising in exotic cars has opened in the next street from my own workshop.

I've never seen so many Ferrari and Lamborghini cars in my life.

There are three Ferrari 360 Modena's in there at the moment.

[Brazen]

Yeah but its all relative - a decade or so back the biggest selling cars were powerful rear wheel drive 6 cylinder sedans. Now its little 4 cylinder hatchbacks made in South Korea or Thailand. I think many people are spending less on a car as a proportion of their income.

[vztrt]

The question is are these cars bought as salary car or private. Plenty of people need to spend a minimum amount of money due to tax.

[Trump]

Originally Posted by SSD-85

This is but a minor indirect observation of what happens when a country spreads its legs wide open to free trade with other countries that have greater manufacturing manpower, and deliver to a far wider clientele than the 20-odd million here.

Australia will reap what it has sown.

Yep, the seeds are rotten and won't even germinate...

[MITCHAY]

Lol even Canberra has been chocka full of BMW, Mercedes, Audis, Porches and the odd Ferrari or Lamborghini for as long as I remember.

It's nothing new as far as I'm concerned. Big deal that people that make good money throw down on nice cars. I'm so shocked

[Sprintey]

& you'd all be surprised just how high that debt (and thus 'growth' thus income as people do well out of it) can go before anything will break. Both gov debt and private debt.

Anyone waiting for Australia to go belly up is going to be waiting a while, no matter how much we can all see an unsustainable process unfold. Generally we just sell up bits of the country to the latest financial superpower, hopefully to buy it back at pennies years later in the bust... So drop those rates and ratchet those house prices

In fact, when you look at the yields on Spanish or Portugese gov debt, you would be blown away that so little risk is being signaled by the debt of fiscal deadbeats... ah QE. Soon the ECB will own the lot... Bond yields have ceased to function as measures of risk of the counterparty (or more esoterically a "price" of money being inferred from them)

So party on Garth, party on Wayne! I quite like the Audis myself...

[.:4:.]

Originally Posted by Sprintey

So party on Garth, party on Wayne!.

Nice reference to Waynes world