Auto industry's slide continues

New car sales dive as Treasurer acknowledges Australia is in recession.

Droughts, floods, bushfires, tight lending conditions, unfavourable exchange rates, political uncertainty and now the devastating effect of the COVID-19 pandemic. 

That’s the laundry list of factors cited by the Federal Chamber of Automotive Industries (FCAI) in releasing new vehicle sales statistics for May 2020, which show the largest drop in sales for that month since VFACTS statistics began recording in 1991.

In total, just 59,894 vehicles were sold across the nation during May, which represents a 35.3% reduction in sales compared with the May 2019 figure of 92,561 vehicles.  

The figures arrived on the same day that Treasurer Josh Frydenberg declared Australia was in recession, after the economy shrunk by 0.3% in the March quarter, the first quarter of negative growth in nine years.

While we’ve yet to see the consecutive negative quarters of growth required to declare a technical recession, the Sydney Morning Herald reported the Treasury and RBA were all but resigned to the fact the June quarter would be even worse. 

There’s no such shadow of doubt when it comes to new car sales, however, which have now chalked up their 26th month of consecutive decline. 

“While COVID-19 was primarily a health crisis, it has brought about an economic crisis as well.  These are difficult times for the global and domestic economy, and this of course has repercussions for the local sales sector, including the automotive industry,” said Tony Weber, chief executive of the FCAI. 

He pointed to a collapse in consumer confidence and the subsequent curtailing of retail activity, as tens of thousands of workers were sacked, stood down or had their work hours reduced and household income and expenditure contracted accordingly. 

The Reserve Bank of Australia has warned that, over the first six months of 2020, Australia was likely to experience the “biggest contraction in national output and income that we have witnessed since the Great Depression.”


There were few winners and a great many losers in the May new car sales data, which saw Toyota retain its now-customary number one spot with a commanding 24.2% monthly market share over second-placed Mazda’s 9.5%, and third-placed Hyundai on 6.9%.

Not even Toyota could escape the sales rout, however, with its total volume of sales down 8711 units compared with the same time last year, despite its increasing market share.

Amidst the carnage the pecking order of Australia’s most popular vehicles changed only slightly, with the Toyota HiLux utility maintaining a lock on the number one spot (3257 sales), but arch-rival the Ford Ranger surged back into second place with 2663 sales, up 1123 units on its April effort.  

Mazda managed to get itself back into the game after being squeezed out of the Top 10 last month, with the updated CX-5 claiming sixth spot (1479 sales), and the Mazda3 claiming ninth (1052 sales). 

Nonetheless, the Top 10 was still studded with five Toyota vehicles (HiLux, RAV4, LandCruiser, Corolla and Prado), Korean marque Hyundai being the only other brand to make an appearance, with the i30 and Tucson in eight and 10th spots respectively. 

Despite the carnage, Mr Weber noted the Federal Government’s various stimulus initiatives and the gradual easing of the pandemic-enforced restrictions had introduced some optimism into the market.  

“Anecdotally, we may be beginning to see some ‘green shoots’ in marketplace,” he said.

“With people venturing out a little more, dealers have advised of a slight uptick in floor traffic through dealerships. 

“Additionally, we are hearing from some brands that website traffic is on the rise – a sure sign of increased purchasing interest.

“And finally, brand ‘end of financial year’ campaigns have started, meaning the opportunity to snare a bargain has increased significantly.”