Car, oil imports fall off a cliff
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Car and oil imports sank in May, a factor that will have an impact on auto stocks in Australia over the coming months and perhaps years.
Preliminary international trade in goods figures from the Australian Bureau of Statistics (ABS) show the value of imports fell $4.8bn, or 18 per cent, from the same month in 2019, driven by a large drop in the value of imports of road vehicles and petroleum.
Road vehicles imports hit the lowest value since April 2011, according to the ABS, mostly in passenger vehicles and four wheel drives.
Petroleum imports were the lowest level since February 2005.
Gold, coal and gas also suffered as key trading partners such as China pulled back on demand.
The bright spot was iron ore exports as Australian production stepped up to replace that from Brazil, which dropped following the Vale dam collapse at Brumadinho as the country imposed much stricter safety rules.
The outlook is mixed for car stocks with investors buying optimistic growth stories.
Scott Charlton, chief of toll road operator Transurban (ASX:TCL), told Nine newspapers this week the pandemic might permanently keep people at home, but delivery vans from the spate of online shopping by bored Australians were helping to fill that void.
The company said on Monday that traffic on its key toll roads was recovering, with roads in Sydney and Brisbane bouncing back faster than Melbourne’s Citylink.
Analysts are cautiously optimistic about the potential for toll roads to return to normal, although RBC Capital Markets analyst James Nevin is still reluctant to put a ‘buy’ label on Transurban.
If Australians aren’t buying imported cars they may be buying second hand — that’s a bet investors started taking last week on Carsales (ASX:CAR).
While Carsales is predicting marginal growth this year, it said Australian sales between April and June grew strongly compared to the same period last year.
South Korean sales are growing well but the worsening pandemic in Brazil is likely to put the brakes on that division.
Car equipment seller Super Retail Group (ASX:SUL) just raised $158m from institutions and other professionals with a retail entitlement to lift that to $203m.
It said sales fell by 26.2 per cent in April versus the prior corresponding period but rebounded strongly in May and June.