August car sales in Australia battle economic headwinds

Car sales in reverse as Australia enters first recession in 30 years .

A staggering downturn in new car sales in Victoria thanks to the state’s severe COVID-19 lockdown has dragged the Australian new car market to the worst August result in 23 years and the 29th month in a row of falling sales. 

New vehicle sales figures for August released by the Federal Chamber of Automotive Industries (FCAI) show a continued industry downturn, with a total of 60,986 sales reported during the month, down 28.8% on August 2019.

While all states and territories bar the ACT recorded negative results compared with August 2019, it was Victoria that led the bloodbath with a 65.9% cent downturn, equating to a total of just 8347 sales for the month. New South Wales, Australia’s largest market, recorded 23,431 sales for the month, down 16.3% on August 2019.

The national VFACTS report showed 575,906 sales for the eight months ending 31 August 2020, down 20.4% on the same period in 2019 when 723,283 sales were reported.

The figures were released one day after the Australian Bureau of Statistics announced a 7% drop in gross domestic product for the June quarter – the largest drop ever recorded in a single quarter.
 
Tony Weber, chief executive of the FCAI, said that while the overall industry was showing some response to stimulus packages, the story for Victoria was less than promising.

“The industry has moved swiftly to implement robust COVIDSafe protocols to ensure the health and wellbeing of employees and customers is preserved,” Mr Weber said.

“However, it is particularly difficult for our members and their Victorian dealer networks under the current Stage 4 Restrictions, and this is reflected in the reduced sales figures.

“While we have the utmost respect for essential health priorities, the automotive industry supports the reopening of our economy under appropriate COVIDSafe protocols.

“We’ve seen 29 consecutive months of diminishing sales in this industry, and there’s no doubt our members are feeling the pinch. The move to commence the reopening of industry and markets, especially in Victoria, needs to start as soon as possible.”

Top 10 models by sales volume:

 Rank  Vehicle  Aug '20  Aug '19  % diff.
 1. Toyota Rav4  4825  2006  140.5%
 2. Ford Ranger  2935  3181  -7.7%
 3. Mazda CX-5  1884  1797  4.8%
 4. Toyota LandCruiser  1633  1916  -14.8%
 5. Toyota Corolla  1464  2863  -48.9%
 6. Hyundai i30  1429  2813  -49.2%
 7. Mitsubish Triton  1406  1755  -19.9%
 8. Kia Cerato  1264  1686  -25.0%
 9. Toyota HiLux  1217  3674  -66.9%
 10. Mazda CX-3  1136  1097  3,6%

 

The comments were reiterated by the CEO of the Australian Automotive Dealer Association, James Voortman, who pointed out that while Australia has officially entered its first recession in nearly 30 years, the new car industry had been in recession for nearly 30 months

“Given the uncertainty and disruption in the market, the August result is very concerning because it means businesses are under severe stress and people are losing their jobs,” Mr Voortman said.

“There is a path forward however and we need our federal and state leaders to work together, listen closely to what industry are saying and guide us to a recovery.” 

The AADA is urging the Federal Government to provide assistance through measures such as adjusting responsible lending laws to free up finance, extending the instant asset write-off scheme and reviewing the automotive taxation scheme, which it says is a legacy of a bygone era, designed to protect a local manufacturing industry that no longer exists.
  
Toyota was the top selling brand for the month with 12,449 sales, followed by Mazda (6921), Hyundai (4525), Kia (4521), and Mitsubishi with (4308).

The Toyota RAV4 was again Australia’s most popular vehicle, repeating its winning effort in July, with Toyota claiming August was also the first month that a hybrid-powered version of any model had outsold every other vehicle in Australia. 

The mid-sized RAV4 SUV is sold with both conventional petrol and a petrol-hybrid powertrains, but sales of 4405 hybrids from a total of 4825 sales means the hybrid version alone outsold the next best-selling model, Ford’s Ranger ute, by 1470 sales. 

A statement from Toyota said RAV4 lifted Toyota's overall hybrid tally in August to 6142 cars – or 49.3% of the company's total deliveries to customers.

The figure sets a new record for annual hybrid sales, reaching 33,462 vehicles to the end of August, or 26.6% of the brand's total sales. The previous full-year record was 27,846 hybrid vehicles sold by Toyota last year.

Toyota Australia Vice-President Sales and Marketing Sean Hanley said the surge in demand for Toyota's hybrid vehicles reflected consumer acceptance and understanding that hybrid was a practical and affordable choice that offered savings at the petrol pump, something that was particularly welcome in the current economic climate. 

"Seeing a Toyota hybrid become Australia's best-selling car was a distant dream when we introduced the technology to Australia almost 20 years ago with the original Prius," Mr Hanley said.

"It took us more than 17 years to deliver the first 100,000 hybrids in Australia, but it has taken us just 16 months to sell more than half as many again with total hybrid sales now exceeding 155,000 vehicles.

"You could say that, after almost 20 years in the market, our hybrid technology has become something of an overnight success."

In terms of a segment by segment breakdown, the pain was shared across the board with the passenger vehicle market the worst hit, down by 11,035 sales (-42.8%) over the same month last year; the light commercial market was down by 6279 vehicle sales (-35.9%); the heavy commercial vehicle market was down by 681 sales (-20.7%); and the sports utility market was down 6652 sales (-17.0%).