Finance

Car sales dive 22%, Babcock & Brown rescue, Australian shares rise: Economy roundup

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New vehicle sales fell 22.2% in November, according to new Federal Chamber of Automotive Industries data. It is the worst decline in eight years.

New vehicle sales fell 22.2% in November, according to new Federal Chamber of Automotive Industries data. It is the worst decline in eight years.

The figures come after an 11.4% decline for October compared to last year, while August sales were down 12.3%. September suffered a 3.1% decline from last year.

Sales are now expected to hit 1.019 million for the year – down 160,000 on previous estimates. Sales of larger cars, including the Holden Commodore and Ford Falcon, have fallen 21.2%. Mid-sized cars suffered a 15% decline in sales.

Sales of “upper large” automobiles, including the Chrysler 300C and Holden Caprice, have fallen 63%.

Car manufactures are now having to deal with stock ordered months ago, with Toyota revealing it is managing a stockpile of 40,000 cars.

The figures follow the Rudd Government’s attempts to bailout the car industry with a $6.2 billion assistance package.

Babcock rescue

Troubled finance group Babcock & Brown has been thrown a $150 million lifeline from bankers and will now introduce a restructured balance sheet by next month. The announcement sent the group’s share price soaring 128% to 57c in early trade.

The group has had its shares suspended since 20 November, after a dispute with one of its lenders, but is now in talks discussing the long-term propositions of the business.

“Babcock & Brown today advises that it has reached agreement with its banking syndicate on a solution to address the immediate funding requirements of the business and the establishment of a framework for Babcock & Brown to provide the banking syndicate with a proposal to recapitalise the business over the longer term,” the group said in a statement to the ASX.

Shares rise in Australia and US

Meanwhile, the sharemarket has risen after a 2% gain on Wall Street. The benchmark S&P/ASX200 index was up 21.9 points or 0.62% to 3555.7 at noon AEDT. The dollar remained steady at US64c.

The big winners of the day were crop protection group Nufarm, which jumped 18.8% to $1.42. NAB rose 3% to $19.15, while Westpac shares gained 2.8% to $16.97.

Billabong shares dropped 15.5% to $8.45 on news the retailer will experience negative earnings growth for the six months ending 31 December.

Big New Zealand rate cuts

Following a number of countries worldwide, New Zealand has slashes its official interest rate by 150 basis points, in a bid to lift it out of recession.

The fourth cut to the rate since July brings the official rate to 5% – the lowest since December 2003. Reserve Bank of New Zealand Governor Alan Bollard says the cuts are needed to expand the economy.

“It is appropriate to deliver this reduction quickly to support the economy and keep inflation from falling below the target band. Some further, but significantly smaller, reductions in interest rates may be warranted.”

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