New car sales up, first time in 16 mths

Annual new vehicle sales have risen for the first time in 16 months, in a further sign that the economy is on the recovery path.

Sales of passenger cars, sports utility vehicles (SUV) and commercial vehicles rose 2.2 per cent to 80,813 in October from the same month last year, data from the Federal Chamber of Automotive Industries (FCAI) shows.

It was the first time since June 2008 that sales have increased from the year before.

"This was a good solid monthly result with the welcome return of private, business and rental buyers in larger numbers," FCAI chief executive Andrew McKellar said in a statement on Thursday.

Mr McKellar said more sales were expected towards the end of this year.

"The industry is looking to round out the year on a positive note and we expect a further surge in sales as businesses move to take advantage of the successful tax break prior to the end of the year," he said.

However, Mr McKellar also urged the Reserve Bank of Australia (RBA) to be careful in raising official interest rates.

"While the latest figures are encouraging, we would urge the Reserve Bank to proceed with caution in contemplating further interest rate rises until the foundations of a full recovery are clearly established," he said.

The RBA on Tuesday lifted the cash rate to 3.50 per cent, from 3.25 per cent, in its second consecutive monthly rates adjustment.

Many financial market economists believe it could hike again in December.

The FCAI survey shows SUV sales lead the charge in the year to October, recording a 9.5 per cent rise, followed by a 3.4 per cent lift in light commercial vehicles and a 1.3 per cent increase in passenger cars.

Heavy commercial vehicle sales fell 24.9 per cent.

Toyota remained in the top sales position with 17,888 vehicle sales, ahead of Holden with 10,737 and Ford with 8,240.

Year-to-date, 762,787 new vehicles have been sold, down 11.7 per cent compared to the same period last year, the FCAI said.