Strong Aussie dollar and cheaper cars push sales up

Car affordability is the best it has been since the 1970s, says CommSec chief economist Craig James.

Competitive car prices and the relatively strong Australian dollar are tempting more Australians to upgrade to a new set of wheels.

New car sales rose 4 per cent in June to 97,687, the Australian Bureau of Statistics said yesterday.

Sales were also up 7.1 per cent over the past 12 months, official data shows.

CommSec chief economist Craig James said the strength of the Aussie dollar and strong global competition in the car market was putting downward pressure on car prices.

"Car sales are at record highs for the month of June and record highs over the financial year," James said.

"The affordability of cars is the best since the 1970s so for ordinary private buyers, there's a lot of attraction in updating your ride."

James said demand for new vehicles was also coming from mining companies, and construction companies working in the improving housing sector. Government incentives for businesses to increase their purchase of new vehicles was also a factor, he said.

But James said the fall in car prices would slow down as the Australian dollar continued losing ground.

Car sales could also slow due to a wind-down of the mining boom and consumer caution driven by a softer jobs market, he said.

- AAP