Although the Australian retail automotive sales market continued to experience strong growth in 2016, a research company has posed the question of whether we have reached, or are approaching, peak levels of automotive ownership.

ACA Research reviewed 2016’s automotive sales, as reported by VFACTS, and the impact of ongoing changes in the Australian car industry.

Year-on-year car sales increased by 2% following 3.8% growth in 2015.

“The most notable growth has been in commercial fleet sales recording an astonishing 13% increase year-on-year while, in contrast, private sales have declined by 5.8%,” the ACA Research report said.

“While passenger vehicle sales volumes have declined year-on-year, they continue to be the category leader, accounting for 41.3% of all new car sales in Australia. However, as SUVs continue their upward surge, we can expect to see this segment of the market overtaking passenger vehicle sales at some point during 2017-18.”

The report noted that while sales of light commercial vehicles increased by 9.4% in 2015, driven by strong demand from business buyers for utes, ute sales to private buyers declined in 2016.

“At a model level the big story is the rapid ascendance of the Toyota Hilux to top spot in the pecking order for Australia’s top selling vehicle, with the Ford Ranger moving into fourth place,” the report said.

“Competition at the higher end of the ute market is only going to intensify with Mercedes and Renault launching models into the market in 2017. Hyundai bucked the downward trend in the passenger car market, with sales of the i30 increasing by 16.9%.”

In terms of overall car sales Toyota led the way with a 17.8% market share. Holden has fallen to fourth place, overtaken by Hyundai.

“Holden’s future model lineup of overseas manufactured vehicles may ultimately prove to be an opportunity to regain lost ground,” the report said.

Kia made big strides, enjoying a 20% increase in passenger car sales and a 40% increase in SUV sales.

“With a strong technology play backed by a seven-year unlimited km warranty, seven years capped price servicing and seven years roadside assistance, we expect Kia to grow its share of new vehicle sales,” the report said.

“We are also seeing a blurring of the lines between luxury and mass vehicle brands. For example, Mercedes Benz (with the GLA and GLC) and BMW (with the X1 and X3) are both  pushing aggressively into the mainstream SUV market. Conversely, Hyundai is making a play for the luxury segment of the market by spinning off Genesis Motors as a separate division, with the new G80 set to be unveiled in Australia in 2017.”

Autonomous vehicles and the peak auto question

“Looking further ahead, the broader questions are: when will we reach peak automotive in the Australian market and when might we see the first sale of a fully autonomous vehicle?” the report asked.

“With the Australian national vehicle fleet growing 2.1% from 2015 to 2016 to a total of 18.4 million registered vehicles at 31 January 2016, the signs are that the automotive market in Australia has not yet reached saturation point. The main drivers of demand, population growth (currently at 1.6% pa) and business formation rates, are on an upward trend.

“However other factors, such as the growth of car sharing and pooling, increasing urbanisation and a shift away from car ownership among younger demographic segments, may dampen future demand. Looking overseas, both Toyota and Nissan expect a decline in future sales in the United States but anticipate growth in key Asian markets.

“Our view is that Australia will continue to be a competitive, dynamic and expanding automotive market in the near term. However looking at how leading OEM’s envision the future (for example Ford’s Smart Mobility plan), the inescapable conclusion is that we are on the cusp of a transformation change in the automotive industry.”

The researchers concluded that the introduction of fully autonomous vehicles will have a major impact on how users think about their mobility needs as well as how car ownership and usage fits into this.

“The question about ‘when’ is likely to be determined by how quickly our regulators get to grips with the impact of this technology, but most leading OEMs are expecting to introduce a fully driverless car into the market by 2025 at the latest, and have plans to retrofit existing vehicles within a similar timeframe,” the report concluded.

So we’re not at peak auto yet but we might well be within a decade. Times, they are a-changin’.

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