Australia’s new vehicle sales for the twenty-fourth consecutive month in March, according to the Federal Chamber of Automotive Industries’ (FCAI) VFACTS report.

Sales for the month totalled 81,690, consisting of 21,777 passenger vehicles for a 26.7 percent share of the market, 39,171 SUVs (48.0 percent share) and 18,162 light commercial vehicles (22.2 percent share).

These figures represent negative growth of 17.9 percent when compared to March 2019 and are mainly attributed to the effects of the COVID-19 pandemic on the general economy.

Toyota was the best-selling brand in March, with 17,583 sales recorded. In second place was Mazda with 6,819 sales, followed by Mitsubishi with 6,002 sales, Kia with 5,654 sales and Hyundai with 5,306 sales.

The top-selling vehicle in March was the Toyota Hi-Lux with 3,556 sales, followed by the Ford Ranger (3,108 sales), Toyota RAV 4 (2,991 sales), Toyota Corolla (2,812 sales) and the Holden Colorado (2,391 sales).
Tony Weber, chief executive of the FCAI, said that despite the difficult conditions, numerous automotive dealerships around Australia remained open.

“Many dealerships have opted to remain open to maintain support for customers, particularly from a service perspective, during this difficult period,” he said.

“Of particular importance are first responder and essential services vehicles. We must keep these vehicles on the road to ensure our communities continue to function and remain safe. In addition, we need to ensure those who physically attend their workplace can travel safely. The motor vehicle is a safe form of transport during the pandemic, allowing occupants to preserve their personal distance from other commuters.

“Within dealerships, customer safety is of the highest priority, and automotive brands have initiated a variety of enhanced hygiene protocols and contactless consultations to maintain personal distance.”
The March monthly result represents the 24th consecutive month of negative growth for the automotive industry in Australia and has been caused by a number of issues over the past two years, including environmental, political and economic factors.

It is certainly no surprise that sales are down given the state of the market over the past two years, compounded by the drought affecting large parts of the country and the bushfire crisis that engulfed Australia over summer.

New reporting gives more accurate picture

The other factor is that since the beginning of the year, the FCAI has applied its new reporting requirements to the VFACTS product.
In early January FCAI confirmed that all vehicles would have to be registered before being recorded as sold in VFACTS. This represents progress in the battle against the ‘cyber-cars’ problem plaguing Dealers, but it is only the first step and does not stop some OEMs from pressuring their Dealers to register cars as demos in order to achieve incentive targets. Furthermore, it does not stop a shift by the OEMs to move to targets on wholesale volumes, a concerning practice being undertaken by a number of OEMs in recent months.
In fact, too many cars being reported as sold are still not ending up in the hands of a genuine customer. New car Dealers are well aware of the consequences this has for their businesses but are fearful of reprisals if they do not comply.

Accuracy matters

Another consequence of such reporting practices is that they bring into question the credibility of the VFACTS product. VFACTS is relied on by the likes of the Reserve Bank of Australia, the Australian Bureau of Statistics and market analysts among others to ascertain the health of the economy and the industry.

Previously, AADA has suggested ASIC take a look at this in the same way the corporate regulator in the US has, resulting in action against FCA and BMW.

For VFACTS to be credible only vehicles being purchased by a genuine customer should be reported as sold. No demonstrators. No service loan vehicles.

AADA will continue working with members, the FCAI and Government in an attempt to clean up Australia’s automotive sales reporting practices.

Recession?

The media has started asking whether Australia is perhaps experiencing a retail recession. In the automotive retail sector there is no doubt about it. The definition of a recession is two consecutive quarters of negative economic growth – our industry has been in decline for eight quarters.

Trading conditions for Dealers are incredibly difficult and frustratingly, there is no one reason for the decline. The combination of consumer sentiment driven by declining house values and the tightening of credit linked to the Royal Commission are two factors often cited.

Mr Weber said the trend of negative growth in the local market reflected the tough times for the retail automotive industry.

“There is no doubt that this is an extraordinarily difficult time for the automotive industry – a situation sadly underlined by the recent announcement of Holden’s withdrawal from the Australian market,” he said.

The FCAI attributed the difficult market conditions to a number of adverse factors directly affecting consumer confidence over 2018, 2019 and the beginning of 2020. These include political and financial uncertainty; environmental factors such as floods, drought and bushfires; and more recently, the growing concerns regarding a global pandemic from the coronavirus.

How about a little stimulation?

The state of the industry feeds into a wider debate occurring in Australia, namely the health of our economy and whether the Government should be applying stimulus measures above and beyond its efforts to combat the coronavirus’s economic impact.

Recent economic data showed that the economy is growing but that growth is disproportionately focused on commodity exports and government spending on infrastructure and the national disability insurance scheme.

Unlike many other areas of the economy, car Dealers are seldom the recipients of Government funding. However, AADA will be using our annual submission to the Federal Budget to suggest targeted measures that could help breathe life back into the industry, such as an expansion of the instant assets write off. AADA will also be urging the Government to do the hard yards on tax reform, an area that is long overdue in the automotive sector.

Hilux top again

The Toyota Hilux, with 3,556 sales, again claimed the title of Australia’s best-selling vehicle, followed by Ford Ranger, with 3,108 sales, and the Toyota RAV4 with 2,991. In fourth place was the Toyota Corolla with 2,812 sales, while fifth was the Holden Colorado with 2,391.

Toyota remained market leader, with 17,583 vehicle sales for the month and 21.5 percent market share. Mazda with 6,819 sales was the second highest brand for the month, claiming 8.3 percent market share. Third was Mitsubishi with 6,002 monthly sales and 7.3 percent market share, followed by Kia (5,654 sales; 6.9 percent) and Hyundai, with monthly sales of 5,306 and market share of 6.5 percent.

Key Points:

• The March 2020 market of 81,690 new vehicle sales is a decrease of 17,752 vehicle sales or -17.9 percent on March 2019 (99,442) vehicle sales. March 2020 had the same number of selling days as March 2019 (25.5) and this resulted in a decrease of 696.2 vehicle sales per day.
• The Passenger Vehicle Market is down by 7,222 vehicle sales (-24.9 percent) over the same month last year; the Sports Utility Market is down by 6,489 vehicle sales (-14.2 percent); the Light Commercial Market is down by 3,326 vehicle sales (-15.5 percent); and the Heavy Commercial Vehicle Market is down by 715 vehicle sales (-21.7 percent) versus March 2019.
• Toyota was market leader in March, followed by Mazda and Mitsubishi. Toyota led Mazda with a margin of 10,764 vehicle sales and 13.2 market share points.