May 2020 VFACTS arrived in all its expected ugliness – but with a few surprises both positive and negative. The accompanying chart shows which franchises won or lost – although perhaps given the COVID-19 crisis it’s more a case of who did the ‘least worst’.

Let’s look at the national picture first.

The national media headlines were all about the 26th consecutive year-over-year monthly decline. But that glosses over some important variations in performance and ignores some reasons for growing optimism.

The national market came in at 59,000 sales for the month. You have to go back 26 years to May 1994 to find a lower May total – no surprise there. That said, the month was down 35.3% on May 2019. That was marginally better than the 48.5% reduction suffered in April. Still, no getting away from the dire reality that for the five months through May, the industry declined 23.9% compared to 2019.

The reduction in the monthly rate of decline is at least a positive and – let’s face it…we’ll take what we can get right now.

If we turn to the performances by individual franchises, interesting variations start to emerge. On the upside, consider the following:

  • Two newcomer brands – Haval and MG (both Chinese) top the list of out-performing franchises. Admittedly, both are coming off low volume bases. However, their emergence shows the enduring consumer appeal of affordable product offerings with enough features and defensible quality levels – it’s not rocket science, right?
  • A big bold truck brand – RAM also had a stellar month and is up 31.3% for the year. Again, volumes were much lower in 2019, but the addition of new well-priced offerings and the appeal of great product capability and robustness combined with a stonking HEMI V8 is driving this one hard. Electric vehicles? Never heard of them!
  • Luxury and Prestige rules – BMW, Porsche, Audi, Lexus and Mercedes all beat the overall market decline handily. So did Ferrari, Maserati and Bentley (off small numbers). How can that happen in the midst of this economic crisis foisted on us by COVID-19?
  • Anecdotally, the reasons floating around the market include:
    • consumers can’t travel (skiing in NZ for example) so they self-gratify with a slightly indulgent vehicle purchase;
    • a couple of brands did place large numbers of company vehicles, demos and loaners into service; and
    • for various reasons orders were held over so deliveries for some brands ran ahead of true ambient demand for the month.
  • Toyota continues to dominate – Even in the midst of a 26-year low and a pandemic Toyota continues to reap the market benefits of simply consistently getting it right on all the important factors most of the time. Almost 75,000 sales in five months. What crisis?
  • Some other volume players hung in – Ford and Isuzu Ute both delivered Y-O-Y % deltas just a whisker below the market average. In both cases, newer product and a high-quality right-sized and capable Dealer Network seems to be the answer compared with other less successful volume players.

At the other end of the table there is plenty of woe to go around.

Having sat in an OEM’s managing director chair myself, I’m not going to try to understand the complexity that faces good people doing their best under trying circumstances. There are many reasons why franchises fall off the pace in various markets. Very often, those reasons lie at the feet of decision-makers in far-off centres.

In 1966 Professor Geoffrey Blainey wrote a seminal work entitled The Tyranny of Distance: How Distance Shaped Australia’s History.

For the leaders of the local arms of some of the offshore multi-national vehicle manufacturers, distance certainly continues to shape the fortunes of many franchises.

At about 1.2% of the annual global new light vehicle market (pre-COVID-19) the Australian market is often brushed aside.

There might have been over-use of the broom in the last few months?

Finally, it’s important to acknowledge the efforts being made by the Federal Chamber of Automotive Industries (the owners of VFACTS) and some of the leading franchisors to improve the integrity of the numbers by eliminating fake reporting of retails.

Perhaps that is a further factor at play in reducing reported numbers in 2020.

This article was written by David Blackhall, Industry Consultant, Raglan Ridge Advisory.

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