Aust & NZ
12th May 2015

VFACTS April 2015 - Automotive Market Trends

Industry managers have every reason to smile since sales have shifted a gear up and really taken off! Unlike the doom and gloom affecting the mining industry, the new motor vehicles market is revving up and there is no hint of a reverse in the trend.

The market has really turned around for the Australian Automotive Industry with sales for new cars continuing to track upwards. The latest VFACTS National Report revealed new car sales year-to-date were (up 3.5 per cent) 12,170 more than previous year. April sales figures were also positive (up 1.2 per cent) with 946 more vehicles sold than 2015.

In earlier posts this year, we drew attention to research conducted by Roy Morgan and IBISWorld as possible indicators for the ongoing rise in new car sales figures. According to Roy Morgan’s research, 2.24 million people are predicted to be planning to buy a new vehicle in the next four years. Purchase of these new vehicles, as revealed by the IBISWorld research, will be through financing as more Australians are now prepared to borrow money to buy a new vehicle.

Other factors contributing to this phenomenon and for the latest VFACTS new car sales figures are the plummeting price of oil, a surging US dollar and lower inflation rate. This drop in inflation has pushed the Reserve Bank to continue to cut interest rates, now at a 60-year low record of 2.0 per cent (As this article is written). These state of affairs within the Australian economy are turning consumer confidence and giving Australians more buying power, hence the reason for the latest financing trend.

As the Chief executive of the FCAI Tony Weber stated, “When you match low prices with low interest rates, people have a greater reason to buy a new car.” With the end of the financial year closing in, we will see more people entering the market seeking a great deal on a new vehicle, thus creating an opportunity for automotive dealers to attract more buyers with the right messages and offers to close in and successfully reach their end of financial year quotas.

With more Australians entering the new vehicle market, it is interesting to note shifts in vehicle preferences steered by lifestyle trends. The latest VFACTS figures reveal a further decline in the sale of new passenger vehicles, but steady sales climbing for Sports Utility Vehicles (SUV).

It appears that Australians are responding well to the ‘Outdoor Lifestyle’ campaign messages promoted by SUV manufacturers. The attraction of such an active lifestyle is certainly appealing. The latest VFACTS figures reveal buyers are preferring small SUV vehicles over any other vehicle type and size. We wonder how many of these buyers actually drive their SUVs to experience the ‘Great Outdoors’? Despite their ‘limited’ usage, strong performance as per VFACTS statistics for the month of April show Suzuki Jimny and MINI Countryman are setting the pace.

Prior to diving deeper into the latest VFACTS figures and report on key findings we conclude this post with these predictions. The Automotive Industry can expect to finish the year well.

Lower interest rates are expected to entice more people into the market, driving up demand for new vehicles. We anticipate a stronger promotional push by SUV manufacturers and expect the SUV segment to surpass all other vehicle segments in volume sales. We also predict further capital investment by small business enterprises and see an increase in light and heavy commercial vehicles sold in the coming quarter with much of the growth taking place in Victoria.

Furthermore, we expect Toyota to continue to be the strongest contestant in the market. Toyota was the highest-selling brand in April 2015 (with 18.7 per cent) followed by Mazda (with 9.9 per cent), Hyundai (with 8.8 per cent), Holden (with 8.7 per cent) and Ford (with 6.3 per cent). In addition, we anticipate Toyota to maintain pole position as the top-selling brand with stronger sales of its Toyota Corolla. The Toyota Corolla was the most popular car in April 2015 (with 3,223 vehicles sold), followed by the Toyota Hilux (with 2,789 vehicles sold), Mazda3 (with 2.365 vehicles sold), Hyundai i30 (with 2,298 vehicles sold) and the Ford Ranger (with 2,200 vehicles sold).

At Pentana Solutions, we are optimistic about the seven weeks remaining to the end of the financial year; we anticipate plenty of activity across the automotive industry and wish all automotive stakeholders a good climax to the financial year. For our next post, we look forward to reporting good news from the next VFACTS national new vehicle sales report.

Until then, keep pressing on the accelerator!

VFACTS FIGURES

At a Glance

Based on the latest VFACTS figures, new car sales rose by 1.2 per cent for the month of April and overall were up 3.5 per cent in 2015.

Top five selling brands – April 2015 (Market Share YTD)

• Toyota (up 17.9 per cent, 64,285)

• Mazda (up 101 per cent, 36,348)

• Holden (up 8.9 per cent, 31,853)

• Hyundai (up 8.6 per cent, 30, 823)

• Nissan (up 6.1 per cent, 21,847)

Top five selling brands - April 2015 (Market Share YTD)
Top five selling brands - April 2015 (Market Share YTD)

Top five individual models (by sales volume)

• Toyota Corolla (down -2.3 per cent, 3,238)

• Toyota Hi-Lux (up 8.4 per cent, 2,789)

• Mazda 3 (down 22.6 per cent, 2,365)

• Hyundai i30 (up 1.2 per cent, 2,298)

• Ford Ranger (up 5.1 per cent, 2,200)

Top five individual models (by sales volume)
Top five individual models (by sales volume)

State Sales Performance

Most states had increased sales for the month of April, Tasmania lead (up 8.3 percent), second in was Victoria, with April sales soaring (up 5 per cent) from 21,108 to 22,160. The Australian Capital Territory also increased (up 2.9 per cent) and New South Wales (up 2.5 per cent) finishing with an additional 369 new vehicles sold. Queensland also rose (up 1.7 per cent) selling an additional 294 new vehicles. However, the Northern Territory (down 11.4 per cent), Western Australian (down 11.6 per cent) and South Australia (down 1.1 per cent) had slower months to report. The decline of new car sales in Western Australia and the Northern Territory may be due to the ongoing downturn of the mining sector.

Tasmania lead year-to-date sales (up 8.3 per cent), followed by Victoria (up 6 per cent) with an additional 5,530 new vehicles sold. Queensland (up 4.9 per cent) with an additional 3,415 new sales. New South Wales (up 4.4 per cent) with an additional 4,885 new sales. Australian Capital Territory (up 2.2 per cent) with an additional 124 new sales and South Australia (up 1.1 per cent) with an additional 217 new sales. However, sales fell for Western Australia (down 6.7 per cent) -2,471 vehicles and the Northern Territory (down 6 per cent) -21 fewer vehicles.

SUV Market

2015 appears to be the year for SUVs, this segment has performed well with an increase in year-to-date sales (up 15.7 per cent) going from 107,902 in 2014 to 124,885 in 2015. That is 16,983 new SUV vehicles on the road mostly purchased by Rental buyers (up 71.9 per cent) and private buyers (up 16.9 per cent).

Stronger sales came from small SUV with year-to-end volume sales at 34,279 (up 30.8 per cent) and medium SUV with year-to-end volume sales at 43,159 (up 13.6 per cent). The best-selling small SUV models under $40K by volume in April 2015 was Mazda CX3 (1,396) and the two best-selling models over $40K were Lexus NX (235) and Mercedes-Benz GLA-Class (193).

The top SUV medium models sold in April by volume were, under $60K was the Mazda CX5 (1,868) and over $60K was the Audi Q5 (363).

Sales for SUV petrol fuel type vehicles continue to dominate, but it is interesting to note the combined year-to-date sales of SUV vehicles from private and non-private buyers increased for SUV Hybrid fuel models (up 386 per cent).

According to Automotive Content Experience (ACE), February 2015 post, SUVs and crossovers are among the most popular vehicles in America. ACE point that these fuel-efficient vehicles’ versatility makes them an attractive alternative to a sedan, minivans and wagons. These vehicles offer good fuel economy for buyers and with more models introduced to market, buyers are spoilt for choice!

Buyers in Australia are also being catered with more hybrid models as original equipment manufacturers exploit this opportunity. In a recent article, Car Advice, reported Mercedes-Benz Australia confirmed plans to add three plug-in hybrid models to its showroom in 2015. The move to offer plug-in hybrid versions of its C-Class, GLE-Class and flagship S-Class models will make the automotive luxury brand as having the most cars of that fuel type in Australia.

Australia is most likely to follow the US trend for hybrid SUVs, a smart move by Mercedes-Benz for introducing these plug-in hybrid versions later this year. Other brands offering Australian buyers with hybrid models include Porsche (with the Panamena and new Cayenne hybrid models), BMW (with the i3 and i8 hybrids), Holden (with the Volt model) and Mitsubishi (with the Outlander PHEV model).

Luxury Marques

Globally, prestige brands normally account for eight per cent in sales but in Australia these brands make up more than 11 per cent of new vehicle deliveries (source: news.com.au)

The latest VFACTS figures support this as more Australians are selecting to drive in style with new car sales for luxury marques continuing to do well. Interestingly, there has been more people entering the ultra- luxury sports market, with year-to-date sales for Lamborghini (up 820 per cent), Maserati (up 200 per cent), Ferrari (up 106.5 per cent), McLaren (up 75 per cent) and Aston Martin (up 17.1 per cent).

On the other side of the luxury spectrum, there is good activity across other well-known contestants with Rolls-Royce (up 100 per cent), Porsche (up 62 per cent), Mercedes-Benz (up 22.7 per cent), Audi (up 14.7 per cent), Lexus (up 22.7 per cent) and BMW (up 8.8 per cent). BMW, however, sold fewer vehicles in April than the previous year - dropping from 1667 to 1554.

Passenger Vehicles

Sales of new passenger vehicles fell (by 4.4 per cent), the VFACTS figures revealed that the only categories continuing to attract the most buyers are the light (up 11 per cent) and medium (up 6 per cent) passenger vehicles.

Year-to-date sale of the top performers of light passenger vehicles under $25K were: Honda City (up 194.3 per cent), Honda Jazz (up 91.3 per cent) and Suzuki Swift (up 63.7 per cent). Year-to-date volume sales of the top light passenger vehicles over $25K were, MINI Hatch/Clubman (up 132 per cent) Citroen C3 (up 104.2 per cent) and Peugeot 208 (up 9.9 per cent).

In the medium passenger segment year-to-date sales for cars under $60K performing well were: Subaru Liberty (up 267.9 per cent), Nissan Altima (up 72.7 per cent), and Skoda Octavia (50.7 per cent). Models over $60K with best year-to-date sales included, Mercedes-Benz C-Class (up 102.4 per cent), Mercedes-Benz CLA-Class (up 86.8 per cent) and Infiniti Q50 (up 34.8 per cent)