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Motor industry enjoys record 2017

By intouch * posted 29-01-2018 15:02

  
By Robert Fuller, CEO IPWEA

Australia’s motor industry achieved another record year of sales in 2017, marking the industry’s fourth record in five years.


Vehicle sales for 2017 reached 1.189 million units (up 0.9%), breaking the 2016 sales record year. 

In 2016, the Australian new-vehicle market reached 1.178 million units, up 2% on the industry’s previous record in 2015, according to the Australian Federal Chamber of Automotive Industries’ VFACTS report.

Australia’s love affair with the SUV sees no end, with business purchases of SUVs rising last year by just on 13%, compared with light commercial’s increase of 14.6%. With households however having less disposable income, sales to private buyers fell 3.4%. 

Year on year (November) light commercial vehicle sales were up almost 8% compared with 2016. Perhaps not surprisingly, Toyota remained the market leader with an 18.6% share of the market, and the Toyota Hilux ute was Australia’s best-selling vehicle in November (4103), followed by the Ford Ranger (3576), the Toyota Corolla (2959), Mazda 3 (2464) and the Mazda CX-5 (2358). Take out the popularity of the small cars, Mazda 3 and Corolla, and you have the business/SUV power horses dominating the market.

Similar results were repeated for the fleet sector: In June 2017, fleet-specific sales for the light commercial market were up 3079 vehicles sales (12.2%); and the heavy commercial vehicle market was up by 327 vehicle sales (9.2%) versus June 2016.

Clearly, SUVs and utes are powering the Australian market toward another record year. The HiLux has been the most popular vehicle two year running. Sales of sport/utilities surged 11.7% in June 2017, with the larger SUV segment rising almost 21%. There is no sign of this slowing for 2018.

"For the first time ever in the history of the Australian automotive market, passenger vehicle sales have been overtaken by SUV sales,” according to George Loukas, Director, National Fleet for Holden.

“SUVs and utes were hot sellers (39.2% of all sales) as private buyers and small businesses took advantage of special incentive offers in the lead up to the end of the financial year.” Passenger vehicle sales were 37.8%.

Sales records were broken mid-year due to the heavy discounting of the Toyota HiLux and Ford Ranger. Demand for sedans and small hatchbacks continued to slide.

But, it’s not just the work-end of the vehicle market that was making big marks. Luxury vehicle sales were also booming with both BMW and Audi just being pipped by Mercedes-Benz – each averaging around 2000 – 2600 units per month in 2017.

So, what’s driving these record sales at a time when we have seen Ford in October 2016, and Holden and Toyota in October 2017, all exiting the Australian local manufacturing market?

Before delving into the why, it must be stated however that the Australian Government – like most governments around the world, was providing subsidising to the motor vehicle industry to the tune of around $7500 per vehicle produced.

2018 arrives and Australia is now a vehicle importing country. In one regard this has unshackled governments and others from their “Buy Australia” policy and now affords a wider choice of vehicles. 

We have seen for example, Victorian Police opting for the BMW as their highway patrol vehicle of choice, whereas the NSW Police have selected the Chrysler 300.

The macroeconomic factors driving 2017/18 automotive demand in Australia are:

  • the prevailing low interest rate
  • ready availability of finance
  • the still relatively low Australian dollar that is boosting our exports
  • current and expected confidence of general economic growth to continue
  • the level of government and consumer spending
Added to this are:

  • historically low interest rates showing no foreseeable sign of changing encouraging consumer spending
  • an upswing in building and investment properties with a moderate recovery in the minerals sector giving job and income security
  • a steady population growth
All this on the back of Australia's jobs boom which has now extended to its 15th consecutive month of growth, the longest unbroken period of growth recorded by the Australian Bureau of Statistics.
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