Australians purchased 1,113,224 new cars last year – making 2014 the third year in history where more than 1.1 million new cars were sold over 12 months.

Though it’s a solid result, the final tally is down more than 23,000 vehicles on 2013, which is admittedly unsurprising considering sales in 2014 consistently lagged behind those set in the previous year. This was unhelped by December sales results, where every Australian state and territory posted year-to-date losses, except New South Wales.

Tasmania and Western Australia were the hardest hit (down 9.7% and 8.1% respectively), with overall sales lagging by 2% compared to December 2013.

Nevertheless, it’s not all negative news. In line with the patterns reported month to month, last year saw healthy growth in both the SUV and light commercial segments. In fact, according to FCAI Chief Executive Tony Weber, ‘SUVs and light commercial vehicles now account for almost 50 per cent of new car sales in Australia.’

Mr Weber credits the success of the SUV segment in particular to the flexibility of the vehicles, as well as the sheer amount of options to choose from: ‘The increase in SUV purchases is a reflection of the versatility these vehicles provide and the increasing range of these vehicles available in the market,’ said Mr Weber.

Toyota vs Mazda – A Photo Finish

Long gone are the days where large sedans, including the Holden Commodore and Ford Falcon, battle it out for the crown of best-selling model.

Instead, today’s top-spot on the podium belongs to a smaller contender.

Throughout 2014 competition was fierce between arch rivals Mazda3 and Toyota Corolla for the title of Australia’s most loved car, with Mazda eventually succumbing to Toyota – but only by 422 units.

The Toyota Hilux, a consistent favourite, took third place, closely followed by Hyundai’s hero, the i30. In some welcome good news for Australian manufacturing, the Holden Commodore performed solidly, taking out fifth place with sales of just over 30,000.

In the battle for best-selling manufacturer, Toyota took its usual spot in first place, selling almost double the cars of second-best Holden.

Obviously related to the country’s overall decrease in sales, Australia’s top ten selling vehicle makers all posted a decline in 2014 sales volume (compared to 2013), except for Hyundai and Subaru (rising 3.1% and 0.8%).

2014 Sales Slide – Is Consumer Confidence To Blame?

Consumer confidence in Australia plummeted 5.7 per cent in December to just 91.1 points – the lowest it had been in three years.
The results, obtained via the Westpac Melbourne-Institute Sentiment Survey, indicate people’s concern for Australia’s economic future, an issue which will have many negative implications for the economy if it continues.

In a comment to Fairfax Media at the time, Westpac Chief Economist Bill Evans said, ‘we haven’t seen people as worried about jobs, as unfavourably disposed to the employment story as this, ever, in this survey. That’s back to 1975.’

 

 

 

December was not the only month last year where consumer confidence dropped. In fact, there has been consistent unrest amongst the Australian public, particularly since the announcement of the Federal Budget, which continues to cause doubt, according to Evans:

‘Respondents are clearly concerned about the outlook for the economy and job security. In addition, there is ongoing disillusionment about the May budget, six months after it was announced.’

Other major areas of concern for Australians include the strength of the Australian dollar, shaky growth in employment and wages as well as the risks associated with making major investments, including in property.

So what does this mean for Australia’s automotive dealers?

It’s well-documented that consumer spending increases with optimism – particularly for Australia’s economic future. Considering the current pessimistic skew in consumer confidence results, a plateau in sales could be expected. As Mr Evans points out, it’s not only individuals who are curbing their spending, but businesses as well:

‘The way I think this economy’s working at the moment is that businesses are on the sidelines, in terms of their investment and employment decisions. They’re waiting to see a sustained lift in consumer spending and this is just going to delay that,’ Mr Evans said.

Last year, business sales dropped 6.6 per cent compared to 2013, whilst private sales were relatively unchanged – up 0.5 per cent.
The Year Ahead

Of course the big question Dealers want the answer to is this: how will sales look in 2015?

Despite December’s dismal consumer confidence result, Evans assures that it was ‘undoubtedly an overreaction’ to the economic conditions at the time. Whilst he does admit that there will be residual ‘implications for spending’ in 2015, it’s not yet clear how severe they will be and speculation is risky.

Whilst Australia’s new car sales were down over 20,000 units in 2014, another factor not explored here pertains to cyber cars.
In last year’s July/August Edition of Automotive Dealer we reported on the measures some manufacturers allegedly took in 2013 to meet internal sales targets and increase market share. This included counting thousands of cars as sold, when instead they were simply being pushed into Dealer lots for non-existent customers.

This practice likely led to an inflated and inaccurate representation of the true cars sold in 2013, meaning 2014’s figures may not be (comparatively) as far off target after all.

Whatever the case, Dealers who continue to apply proven and well-thought-out strategies around their operations will have the best chance of accomplishing healthy sales results in 2015. From the addition of new learning opportunities like NADA University, to the 2015 AADA National Dealer Convention, as well as the resources included in the pages of this magazine – we will continue to provide as many opportunities as possible for Dealers to achieve success.