Market Insight: Motor market lowest since GFC

AUSTRALIA’S new-vehicle market is on track for its lowest full-year sales tally since the global financial crisis.

Alarmingly, November’s 84,708 sales result was lower than the corresponding month of 2009 – the worst year for the industry in the GFC – when 85,833 sales were recorded.

If December sales reflect the 8.2 per cent decline of the year to date, the Australian market should end up notching about 1,060,000 vehicle sales – the poorest annual result since 2011 when the industry chalked up 1,008,437 sales as the country was struggling to avoid the recession that engulfed many other countries after the 2008 stock market crash.

It would also be the first time since then that the Australian motor industry has not sold at least 1,100,000 vehicles. 

That winning streak started in 2012 and continued every year until 2018, peaking with a record 1,189,116 in 2017.

It has been mostly downhill since, with the market falling 3.0 per cent in 2018 and a further 8.2 this year.

Last month, the industry notched up 20 consecutive months of negative growth, which by any definition puts the automotive sector into recession.

To the end of November, the market had lost 86,955 sales when compared with the same period of last year – the equivalent of a month’s sales.

The damage accelerated last month when 9152 sales evaporated.

Almost every vehicle segment has been hit, with only luxury sportscars above $80,000 and expensive upper-large SUVs – including the new Mercedes-Benz GLS and BMW X7 – going against the flow.

Even medium SUVs – the darling of Australian motorists in recent years and now the biggest single segment – have slipped into reverse with a 1.6 per cent decline this year, while small and large SUVs on either side of the mid-sizers are down 1.9 and 8.2 per cent respectively. 

Most of the decline can be sheeted home to passenger cars which have dived another 16.5 per cent – representing almost 60,000 units – after plummeting 15.9 per cent the previous year.

Small cars, which are still among the most popular vehicles in Australia, have tumbled 17.9 per cent, micro and light cars -16.2 and -16.9 per cent respectively, medium/large cars are down 7.4/26.9 per cent, upper-large cars and people-movers have taken a 15.4/5.7 per cent hit, and sportscars are 21.2 per cent behind where they were last year. 

However, the canary in the mine for Australia’s economy is the commercial vehicle segment. 

Light commercials – utes and vans – are down 5.3 per cent, while heavy commercials – trucks and buses – have suffered an 8.8 per cent drop.

Double-digit declines are seen across most segments, including vans/cab-chassis (-14.7% for sub-2.5t, -11.1% for 2.5-3.5t) and 4x2 utes (-12.0%), with the high-volume 4x4 utes also down (-2.9%). 

Alarmingly, these sales declines accelerated in November, with light commercials slipping 8.8 per cent and heavy commercials diving 17.4 per cent or about double the overall market decline.

The top-selling Toyota HiLux suffered a 21.1 per cent hit as Australia’s favourite vehicle lost almost 1000 sales compared with the same month last year.