Market Trends: Is Australia’s Record Streak Breaking?

New car sales continue their downtrend as questions about consumer confidence are raised.

The Australian new car market has experienced its fifth consecutive month of slower year on year sales.

According to VFACTS, in the month of May, 94,562 new cars were sold, 2,226 less than May 2013. At this point industry observers are speculating that final sales for 2014 may indeed show negative growth, however there is still a way to go.

Many reasons for the comparatively slow performance of the market are being voiced, some of which are covered in this month’s issue, such as lowered consumer confidence and the cyber cars phenomenon.

But it’s not all doom and gloom.

While the May figures show declined sales overall, the New South Wales and South Australian markets have remained steady, demonstrating slight growth when compared to May 2013. What’s more, not all segments have been affected, with some posting substantial growth.

FCAI Chief Executive Tony Weber commented on the demonstrated strength of SUV sales, saying:
‘While new passenger car and light commercial vehicle sales declined by 6.3 and 3.6 per cent, respectively, SUV sales were strong, increasing 5.4 per cent compared to new SUV sales in May 2013. In particular, sales of small SUVs were up 18.8 per cent on May 2013 figures, and large SUV sales were up 10.4 per cent.’

Although consumer confidence has been a major concern for the industry, it actually seems as though the fleet numbers are holding back numbers. While government purchases are up across passenger vehicles, SUVs and LCVs, these sales aren’t enough to make up for the lost commercial sales across these same categories at this point in the year.

Although overall the recent May figures make it the fifth consecutive month we’ve seen reduced sales in 2014, a slew of new models in the second half of the year is set to freshen up the market. And with the historically busy end of financial year period underway, it’s hoped that the market will claw back on some of the shortfall we’ve seen in sales.

The automotive industry saw a record year in sales in 2013, so while 2014 is off to a slow start, there’s no telling what the second half will bring. The US auto industry has surpassed all expectations with its May car sales, with results seeing a surge that has resulted in a 9-year high for the month.

If there’s one thing we know about the auto industry, it’s that figures can often be surprising and here just past the halfway mark in the year, no one can predict how 2014 will finish up. Time will tell if we can match last year’s sales record, or at least come close.




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