GREEN SHOOTS ARE GOOD … AND THERE’S A BIGGER STORY

The Federal Chamber of Automotive Industries’ October 2020 VFACTS media release correctly nailed the key point in the numbers for the month of October – the so-called ‘green shoots’ were well and truly in evidence. Not only that, right across the nation (with one obvious exception) AADA members continued to report healthy retail activity.

Not an across-the-board boom exactly, but not terrible either – in fact, stock started to become an issue for both new and used cars.

As I heard this feedback and perused the numbers my mind turned to Etta James, one of the most prodigiously talented blues singers of all time.
Etta had a global smash hit with the song “At Last”…

At last …
My love has come along …
My lonely days are over …
And life is like a song…

Right on Etta!

This magic lyric neatly captured how I felt once October was done and summer beckoned – along with our release from Victorian house arrest.

At last!

My economics professor at Melbourne University, Jean Polglaze, was an intellectual of towering capacities. She frequently encouraged us to deeper contemplation of the numbers with the words:

“…carefully consider the details in sufficient depth before you write down your answers and thus arrive at assertions you might later regret having made…”

Wise words from the now sadly departed Prof.

So … I’ve carefully considered the following:

  • 25 brands out-performed the October market when measured against the YTD average decline of 18.8% YOY (see table, page 38).
  • Eight of those brands (Ssang Yong, Haval, MG, Great Wall, RAM, LDV, M-B Vans, Audi) have positive YOY volume growth. Well played to those teams.
  • Encouragingly, October month was a mere 1.5% (1236) units behind the same month last year – cause for optimism, but…
  • October 2019 registrations were 8262 units below October 2018, and that month was in turn 4945 units adrift of October 2017. So … we’re still a long way off ‘normal’ conditions.
  • In fact, you have to go back to October 2010 (80925 sales) to find a lower October total than last month’s 81220 – but the 2020 number is COVID-infected, so … tough to draw too many meaningful conclusions about market resilience from this other than to say it is an undoubtedly encouraging bounce back, as FCAI rightfully asserted.
  • “What about the consecutive 31-months of negative MOM deltas?” I hear you ask. I’d say given persistent COVID paranoia during most of 2020 that number just has to be ignored – at least for now. Let’s see what year end brings.
  • More encouragingly, if you disregard the Victorian numbers on the basis that the state perplexingly checked itself into voluntary economic ICU as a result of administrative lapses in hotel quarantine under the guidance of Dear Leader,
  • Dan-il Andrews, then the market was actually up 9.8%.

That’s a true green shoot, people!

Some other interesting numbers of note:

  • Toyota thrashed everyone – daylight was second (as they say at Rosehill). The brand continued its stellar domination of the market with a YTD share of 24.8% (including Lexus). You have to go back to the good old days of a significant tariff wall to see numbers like that – yet, here Toyota stands with 158 thousand sales for the first 10 months – more than double the second place holder Mazda. Oh, and by the way, did I mention Toyota had five of the top 10 best selling nameplates in Australia? When was the last time that happened?

As Max Yasuda, former Toyota Chairman, often said – “Our success does not rest on any one thing we do. It rests on everything we do.”

What he said…Outstanding!

  • Aside from Toyota, no brand achieved double-figure market share for the month. Mazda came close with 9.2%

Honourable mention for them.

  • The Chinese Contenders – Haval and MG – grew their volumes handily. Combined, they’ve now sold more units in 2020 than a long list of other established brands including Audi, Suzuki, Isuzu Ute, Lexus, Volvo and JLR.

Apples and oranges I know, but … footsteps people, footsteps!

Other standout numbers that bear consideration:

  • Two ATECO-distributed brands (RAM and LDV) have grown YOY volume by around 23% – and dealers tell me grosses are holding up well.
  • Ford had a strong month that showed the continuing benefit of Ranger’s strong number 2 position in the top 10 behind HiLux. Everest also contributed handily. The blue oval team finished 4th in the top 10 ranking for the 10 months to October 31st. Well done to them – excellent result and in strong contrast to a former competitor – a name we dare not speak!
  • Porsche and Audi both improved volumes over last year’s October total. Some of these Dealers made good money. Some didn’t apparently and cited ‘lumpy’ inventory and pipeline issues. Take that at face value.
  • KIA drove October volume up by 4.8% compared to the same month last year, outpacing its Seoul brother Hyundai which recorded a M-O-M negative delta of (20.2%). Differences in product portfolios result in different segment coverage, but still, little brother got to within 647 units of big brother.

Talk about an uncomfortable Thanksgiving dinner conversation!

At the other end of the table, supply issues and franchise rearrangement initiatives were the main drivers for some brands’ weak performances. However, those issues don’t account for some of the other truly anaemic numbers. To be blunt, some of these cellar dwellers might be having their Donald Trump end-of-term moment… you know, deciding “When should I leave?”

They know who they are and they know what they should do … so, I forebear further comment.

As the southern hemisphere summer tip-toes into view, dreams of skiing in Aspen and other northern hemisphere vacations evaporate for many Dealers and their teams. But for once at least, living on an island remote from the major northern population centres turns out to be a significant advantage during the COVID plague – even while at the same time asking, as it does, serious questions of our business and personal resilience.
So far, I think we’ve answered that challenge with great success.
But to quote one of my favourite writers, Dave Barry…

“When trouble arises and things look bad, there is always one individual who perceives a solution and is willing to take command. Very often, that individual is crazy.”

Based on what we’ve seen from certain political leaders during the last year all I can say is Dave nailed it right there.

You have been warned!

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