With the new financial year upon us, we examine the state of the automotive sector and the shape of things to come.
The Victorian Automotive Chamber of Commerce (VACC) estimates that the automotive industry currently contributes $39 billion to Australia’s GDP, representing approximately 2.1 per cent of the Australian economy, (VACC, ‘Directions in Australia’s Automotive Industry 2021’).
It’s fair to say the sector is critical to Australia’s economic wellbeing. To put it in other terms, when the automotive sector is doing well, Australia does well.
Unfortunately, these last 12–24 months have been particularly rough on the sector. The COVID-19 pandemic continues to affect vehicle supply, mainly due to factories pausing manufacturing for periods and with shipping supply chains continuing to recover.
More recently, it has had to come to grips with the impact of rising interest rates. There is evidence that the interest rate rise in June 2022 has already put the brakes on up to 10 per cent of finance applications at new car dealerships and contributed to a downward trend in sales enquires in June 2022 (Drive, ‘Interest rate rise applies the brakes on new-car sales in Australia (21 June 2022)).
Nevertheless, some manufacturers are continuing to ride the wave and the industry as a whole is performing better now than it was in 2020 when COVID-19 first revealed itself.
Let’s examine the state of the sector as we head into this new financial year.
National sales figures
According to Car Expert’s VFACTs: May 2022 car sales figures, new vehicle sales in Australia climbed 14.5 per cent in 2021 over a tumultuous 2020, but this year has seen something of a slowdown. The year-to-date tally (to May 2022 inclusive) of 437,884 new vehicles sold is a decline of 4.1 per cent from last year (Car Expert, ‘VFACTs: May 2022 car sales figures’ (3 June 2022)).
New vehicle sales were down 6.4 per cent in May 2022 compared to May 2021. And sales were down 12.2% in April 2022 compared to April last year.
Most popular vehicle makes
South Korean manufacturer Kia has been a surprise performer of late. Not only did it record the second-highest sales (7307 sales) of any carmaker in May 2022 – its highest-ever placing – it relegated rival Hyundai (7063 sales) to third place for the month. It is also slightly ahead of Hyundai in year-to-date sales.
Toyota remains the clear market leader, with 22,813 sales in May, but that’s not to say it’s not facing challenges. The popular manufacturer is having difficulty getting stock into the country, particularly its evergreen RAV4. The other favourites in its range are the Toyota HiLux and the Toyota Ranger.
Mazda (6474 sales) and Mitsubishi (6086 sales) rounded out the Top 5 performers for May.
Car sales by region
All states and territories recorded a drop in vehicle sales of between 1 per cent and 11 per cent in May 2022 relative to last year, except for the Northern Territory, which bucked the trend with an increase of 2.4 per cent (Car Expert, ‘VFACTs: May 2022 car sales figures’ (3 June 2022)).
As for the entire number of new vehicle sales per state in 2021, it generally followed population lines. New South Wales recorded 328,000 sales last year compared to Victoria’s 272,000 and Queensland’s 230,000.
Most sought-after styles
Sales figures show that SUVs continue to be the most popular vehicle purchase. SUVs have 54 per cent of the market share, compared to 23 per cent for light vehicles, 18 per cent for passenger cars and 4 per cent for heavy commercial vehicles.
What does this look like in yearly figure terms? SUVs were the biggest sellers in 2021 with 331,000 private and 160,000 business sales, compared to 128,000 and 65,000 sales respectively for passenger cars.
Number of dealerships operating
The Australian Automotive Dealer Association indicates that 3118 dealerships operate in Australia and employ just under 60,000 people.
Of the major manufacturers, Toyota has the lion’s share of dealer outlets (278), followed by Mitsubishi (195), Ford (194), Nissan (187) and Hyundai (170) (Car Expert, ‘VFACTs: May 2022 car sales figures’ (3 June 2022)).
Rise of electric
It seems fair to end our summary with electric vehicles, the market segment most likely to disrupt in the coming decade. With sales of plug-in electric vehicles (PHEVs) tripling from 6900 in 2020 to 20,665 in 2021, it’s clear we’re at the start of an EV boom.
In May 2022, sales of PHEVs were up an impressive 183.7 per cent from May of last year.
The shift towards electric vehicles is picking up momentum and it’s clear they will continue to be a segment to watch as we get closer to 2030.
- www.carexpert.com.au, 'VFACTs: May 2022 car sales figures’ (3 June 2022)
- www.drive.com.au, 'Interest rate rise applies the brakes on new-car sales in Australia (21 June 2022)
- Automotive Dealer, Mar/Apr 2022
- VACC ‘Directions in Australia’s Automotive Industry – An Industry Report 2021’
- Electric Vehicle Council, ‘EV sales boom presents chance to capture serious economic benefits’ (31 January 2022)
This article has been prepared by Allianz Australia Insurance Limited ABN 15 000 122 850 AFSL234708 (“Allianz”). In some cases, information has been provided to us by third parties and while that information is believed to be accurate and reliable, its accuracy is not guaranteed in any way. Any opinions expressed constitute our views at the time of issue and are subject to change. Neither Allianz, nor its employees or directors give any warranty of accuracy or accept responsibility for any loss or liability incurred by you in respect of any error, omission or misrepresentation in this article.