In this article ACA Research, our partner in the AAAA Aftermarket Dashboard, takes a look at the latest car parc data

Given this year’s events, it is unsurprising that Australian dealerships have been dealt a significant blow when it comes to new vehicle sales, with year-to-date (YTD) sales down by a quarter. In real terms, this means that 104,468 less new vehicles have been sold versus last year.
Given the tight margins with which dealerships operate, they need the sales volumes to manage their finances, so this will be leaving many in a somewhat precarious position. While anecdotal feedback suggests that June figures could be stronger off the back of loosening lockdown conditions, EOFY deals, and tax breaks for businesses, this is unlikely to overcome longer term structural weakness in the market.
At a brand level, we do however see some differences. Starting at the top of the list, we see that Toyota is clearly outperforming its competitors in the top five, with Mazda, Mitsubishi, and Hyundai all losing more than a third of their sales. This is largely riding on the ongoing strength of the Hilux, which remains the best-selling car in the country, and the outstanding results it is achieving with the third placed RAV4 (which is driving significant growth in hybrid sales).

Source: VFACTS New Car Sales. May 2020 Year to Date.

We do however see that some brands have managed to grow their sales year on year. In some cases, this is due to their re-entry into the market (ie. Ssangyong), but others such as MG and RAM are seeing the payoff of an aggressive strategy to expand into the Australian market. In particular here, we can see the success that Chinese auto brands are having in the Australian market (with LDV also down just six percent YoY).

Source: VFACTS New Car Sales. May 2020 Year to Date.

Looking at sales by buyer type, we can also see a level of stability in Government purchases. Overall sales are down, reflecting a consistent drive to reduce fleet budgets, but government SUV sales have increased, suggesting they are continuing their shift away from passenger vehicles, and reflecting broader industry trends.

Source: VFACTS New Car Sales. May 2020 Year to Date.

Although new car sales are down dramatically, it is not all bad news.
The used car market is booming, with industry reports showing used car prices increased by 11 percent in May, swiftly regaining ground lost in March and April. Looking at the 15 most traded models, resale prices for nine increased week to week, with others falling back slightly off the back of recent gains.
This is being driven by a range of factors, with consumers seeking affordable alternatives to public transport, as well as stock shortages in high quality used vehicles off the back of individuals and fleets deferring replacements.

Source: Datium Insights Weekly Market Update 22nd June 2020.

In summary then, we are left with the question of how this affects the aftermarket. Ultimately, while we are likely to see a shift back to new vehicles over the longer term, the short-term demand will skew more to older vehicles.
As a manufacturer or retailer, this is going to affect ranging decisions, with less of a focus on parts or accessories for newer models. As a service and repair provider, this can be seen as an opportunity. Used car buyers typically have a more limited level of engagement with dealerships, opening the door to attract them into your workshop.
Some key questions you should potentially be asking yourself right now are around your customer’s broader household fleet (ie. the other vehicles they own that you could potentially be servicing), how you might be able to meet the needs of local small businesses, and what else could you be offering to make it easy for people to service with you in a COVID-19 environment.

This column was prepared for AAA Magazine by ACA Research, our partners in the AAAA Aftermarket Dashboard which is delivered to AAAA members each quarter.

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