The VACC Industry Report provided a snapshot of the current state of the Australian automotive industry. Here’s a look:
As at 31 January 2016 there were approximately 18.4 million registered vehicles on Australia’s roads. The national vehicle fleet grew by 380,000 vehicles, or 2.1 per cent, since 2015, and over the past decade vehicle growth has averaged 2.4 per cent per annum.
Passenger vehicles comprise just over 75 per cent of the national fleet, followed by light commercial vehicles (16.2%), motorcycles (4.5%), heavy rigid trucks (1.8%), light rigid trucks (0.8%) and other vehicle types (1.5%).
The average age of Australia’s vehicle fleet is 10.1 years, with passenger vehicles representing the youngest vehicles on road (9.8 years’ average age) and campervans and heavy rigid trucks the oldest (17.4 and 15.7 years respectively). Vehicles up to five years of age account for the largest proportion of the national fleet (30.5%), followed by vehicles aged 6-10 years (27.2%), 11-15 years (21.2%) and 16 years and over (21.0%). The average age of the vehicle fleet has not fundamentally changed since 2006.
Approximately 800,000 registered motor vehicles (excluding motorcycles) were scrapped between 2015 and 2016. That equates to 4.4 per cent of the national vehicle fleet. The vehicle scrappage rate has remained relatively consistent over the past five years.
New vehicle market
Just under half of all new vehicles sold in 2016 (48.5%) were private vehicle sales, with sales to businesses, government and the rental market accounting for 42.9, 3.5 and 5.1 per cent respectively.
Over two-thirds of new vehicles sold in 2016 were petrol vehicles (67.1%), followed by diesel vehicles (31.7%), hybrid electric vehicles (1.1%), LPG vehicles (0.1%) and battery electric vehicles (0.01%). Diesel vehicles (particularly light commercial) represent the fastest growing vehicle segment, growing at more than twice the rate of petrol vehicles and up by almost 60 per cent since 2011.
Used vehicle market
Unlike new vehicle sales statistics, which are collected by the FCAI, there is no central authority responsible for the comprehensive collection of used vehicle sales data.
Proxy estimates for used vehicle sales nationally can be obtained through transfer of vehicle registration data, which is available from state and territory vehicle registration authorities. Whilst there are some issues with the classification and quality of vehicle transfer data in each jurisdiction, the data in aggregate provides a reasonably good indication of the size of the used vehicle market.
Vehicle transfer data collected from each jurisdiction indicates that nationally, there were approximately 3.88 million used vehicles sold in 2016. This places the used vehicle market at 3.3 times the size of the new vehicle market in Australia, with annual combined new and used vehicle sales of approximately five million.
Business Structure and Profitability
The overwhelming majority of the automotive industry (96.5%), is comprised of small and family-owned enterprises operating across the automotive spectrum.
Small businesses with between 1-19 employees account for the largest share of automotive businesses (54.6%), followed by sole proprietors with no employees (41.9%). Furthermore, it is estimated that approximately three quarters of all businesses are independently owned and operated, with one quarter operating under a franchise agreement.
Most enterprises (45.3%) have a reported annual turnover of between $200,000 to less than $2 million, with 13.2 per cent reporting an annual turnover of $2 million or more. A considerable proportion of businesses (12.8%) have a reported annual turnover of less than $50,000.
Over the past three years, the Motor Vehicle and Motor Vehicle Parts Wholesaling sector consistently recorded the highest proportion of businesses making a loss, with 37.2 per cent of businesses within the sector recording a loss in 2015/16.
By contrast, the Repair and Maintenance sector recorded the lowest proportion of businesses making a loss in recent years, with 11.6 per cent of businesses recording a loss in 2015/16. On average, approximately 26 per cent of all automotive businesses made a loss in 2015/16, slightly down from 27 per cent in years 2013/14 and 2014/15.
In terms of actual profit margins, profit margins are low and declining across many sectors of the industry. The Repair and Maintenance sector recorded the highest profit margin in 2015/16 (12.2%), with Transport Equipment manufacturing recording the lowest margin (1.1%). Over the past three years, the Motor Vehicle and Motor Vehicle Parts Retailing sector has witnessed a continual decline in profit margins, down from 3.5 per cent in 2013/14 to 2.6 per cent in 2015/16. The average profit margin across all industry sectors was 4.5 per cent in 2015/16, down from 5 per cent in 2013/14.
State by state
New South Wales and ACT
NSW recorded an aggregate employment of 95,257 people within the automotive industry in 2015/16. This represents a decrease in industry employment of 9,519 people (or 9.1 per cent) over the previous year. The decline in employment incorporated most sectors of the industry, except for Fuel Retailing which experienced a 27 per cent increase in full-time employment over the period. Year to date industry employment data (February 2017), however, shows a stable trend in industry employment.
Victoria recorded an aggregate employment of 102,810 people within the automotive industry in 2015/16, a decline of 1,170, (or 1.1 per cent), from 2014/15 (103,980). Most of this decrease in employment occurred within the Motor Vehicle and Motor Vehicle Parts Wholesale and Retail sectors and, to a lesser extent, within the Motor Vehicle and Parts Manufacturing sector.
Queensland recorded an aggregate employment of 88,181 people within the automotive industry, an increase of 5,053, (or 6.1 per cent), from 2014/15 (83,128).
Most of this increase in employment was associated with increases in full-time jobs within Motor Vehicle Parts and Tyre Retailing, Fuel Retailing and the Motor Vehicle Retailing (employment growth of 31%, 19% and 17% respectively).
South Australia recorded an aggregate employment of 29,026 people within the automotive industry in 2015/16, a decline of 1,667, (or 5.4 per cent), from 2014/15 (30,693). This reduction was largely confined to the Motor Vehicle and Motor Vehicle Parts Wholesaling, Fuel Retailing and Automotive Repair and Maintenance sectors.
The closure of passenger car manufacturing operations by Holden in South Australia on 20 October 2017 will result in further reductions to South Australia’s automotive workforce, with approximately 1,000 workers involved in production, engineering and support roles impacted, along with more substantial negative flow-on effects to associated businesses within the supply chain.
Western Australia recorded an aggregate employment of 38,878 people within the automotive industry in 2015/16, a decline of 7,706, (or 16.5 per cent) from 2014/15 (46,584). Proportionally, this represents the largest decline of all jurisdictions. The reduction in employment was spread across most automotive sectors, except for the Motor Vehicle Parts and Tyre Retailing and Marine Equipment Retailing sectors, which grew by 767 and 29 people respectively.
Tasmania recorded an aggregate employment of 7,049 people within the automotive industry in 2015/16, an increase of 333 people, or 5 per cent, from 2014/15 (6,716). This increase was largely attributed to a rise in full-time employment within the Motor Vehicle Retailing sector.
The Northern Territory recorded aggregate employment of 3,971 people within the automotive industry in 2015/16, an increase of 247, or 6.6 per cent, from 2014/15 (3,724). This increase was mainly distributed across Fuel Retailing, Motor Vehicle and Parts Wholesaling and the Motor Vehicle parts and Tyre Retailing sector.