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New car sales hit nine year low

Australia’s vehicle industry is hoping for better times in 2020 following a year which saw the lowest new car sales since 2011. It’s a sure sign of a national economy which is languishing in the doldrums.

According to the Federal Chamber of Automotive Industries’ VFACTS, Australians bought a total of 1,062,867 new vehicles in 2019, which was down 7.8% on the previous year’s total. There was not a shining light anywhere for the industry, with sales down in every state and territory.  The Northern Territory was the worst performer, down a whopping 16% with the ACT not far behind with sales down 11.7%. Tasmania, by contrast, managed to hold the sales slump to just 2.3%. It’s just one positive sign that the Apple Island’s economy is outperforming the other states and territories except Victoria.

While Australia’s economy may not be in a recession there’s no doubt that Australia’s vehicle industry is. It’s been that way for a long time. December 2019 marked the 21st month in a row of sales declines. November’s sales were the worst since 2008 when the Global Financial Crisis rocked the world’s economies.

Not only were sales down, they were down across every market segment, most noticeably in passenger vehicles, which slumped by 16.5%. Ever-popular SUV sales held up best, down by just 2.4%, so Australians’ preference for SUVs over passenger vehicles is still going strong. Sales of large passenger vehicles were down a whopping 25.1%.

“It’s a tough market – full stop,” said Tony Weber, the Chief Executive of the Federal Chamber of Automotive Industries (FCAI).

The industry has been looking for a lift for some time now and has activated multiple levers to achieve some stimulation, including incentives, sales and special vehicle editions,” Mr. Weber said.

However, the appetite for new vehicles remains suppressed. On the bright side, there has never been a better time to purchase a new vehicle.

Of the 10 leading brands Holden was the worst performer, clinging to 10th place with sales down by no less than 28.9%. It’s a pretty remarkable slump for a brand that was Australia’s favourite car for decades.

Holden was by no means alone, because all the leading brands were down, with one notable exception – Kia. It’s now the sixth top selling brand, selling 61,503 vehicles, with sales rising by 4.6%. That’s an amazing performance in a market where half of those top 10 brands saw double digit percentage falls.

Stablemate Hyundai saw an 8.6% sales drop while still holding onto third place. We’ve noted the quality of modern Kia vehicles before and it makes you wonder whether Kia isn’t cannibalizing Hyundai’s sales to some extent. While Kia and Hyundai’s models sharing the same platforms are similar, they differ in one significant respect. Kia offers a seven-year warranty, whereas Hyundai’s is only five. Given the choice of two similar vehicles at similar prices why wouldn’t you choose the one offering two years’ extra warranty?

Amongst the gloom for the vehicle industry is one interesting bright note. Hybrid sales are up, with the hybrid Toyota Camry accounting for half the Camry’s sales while 45% of Corolla sales are for its hybrid variant.

Our enthusiasm for hybrids raises an interesting question: are some potential fleet and private buyers holding onto their old vehicles while they wait for more affordable electric vehicles to enter the market? It’s a question that’s been raised by The Driven – a website that’s gung-ho for electric vehicles, but also news.com.au, which is all-too-frequently hostile to them. Research by Roy Morgan shows a clear rise in the number of Australians intending to buy either a hybrid or electric as their next vehicle, so perhaps there’s something in it.

There’s no doubt that sluggish sales are painful for vehicle makers and dealers desperate to move stock. That makes it a great time to buy because they’re offering some pretty big discounts. If it’s time to upgrade the vehicles in your fleet, or to get your hands on a new car through a money-saving novated lease, then there’s never been a better time to do it. Contact Fleetcare today on 134 333 because right now we’re doing some very good novated lease deals on a range of new vehicles.

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