Market to steady in 2020: FCAI

FOLLOWING the second consecutive year of falling new-car sales, Federal Chamber of Automotive Industries (FCAI) chief executive Tony Weber said he expects the bleeding to stop in 2020 with a similar result to the one just recorded for 2019.

VFACTS figures released this week show a total of 1,062,867 new vehicles were registered in Australia last year, representing a 7.8 per cent decrease over 2018 and the lowest mark since 2011.

In an interview with GoAuto, Mr Weber said he expected the sales downturn to ease in 2020, with a similar tally to 2019’s figure of just over one million units.

“I think 2020 will be pretty similar to 2019, we don’t see any great growth in 2020, but we think it will be stable,” he said.

Mr Weber identified a number of factors that contributed to the 2019 fall that he also expects will prevent a climb back up in 2020, however he noted there are positive signs going forward.

“I think it’s the ongoing issues that we’ve had,” he said. “The issue about finance remains, although we do see some green shoots in that space.

“We think that the pendulum may swing back a little bit post-banking royal commission. Wages growth is still low, so that’s an issue.

“I think that household debt is another issue, and we have greater uncertainty than what we had two or three months ago given the bushfires and the worsening of the drought, so that’s all going to impact the market.”

One positive factor is the housing market, which Mr Weber said was trending in the right direction in Melbourne and Sydney, which often has a positive influence on the car market.

Business and fleet sales suffered in 2019 with a decline of 8.7 per cent, however Mr Weber did not have any reason to believe the downturn would continue, saying he hoped “the damage has been done”.

One shining light to come out of 2019 was the increased uptake in electric and hybrid vehicles.

The VFACTS figures show that full-electric and plug-in hybrid vehicle sales rose 116.3 per cent last year to 2925 units – a figure that does not include the market-leading Tesla brand, which delivered 2414 units of its new Model 3 in August alone – while regular hybrid sales climbed 113.9 per cent to 30,641 units.

The latter was heavily influenced by Toyota’s heavier emphasis on hybrid vehicles which saw it achieve 27,846 sales of the eco-friendly models – 13.5 per cent of the market-leading brand’s total sales and more than double the previous year’s level.

Mr Weber said he expected the uptick to continue, however not at the astronomical rate seen in 2019.

“I think we’re going to see a continued growth in low-emission vehicles – EVs have played their role, but the big change this year is the fact that there was a 114 per cent growth in hybrid vehicle (sales),” he said.

“I think that’s one of the key takeaways from this year. So hybrids went from 14,328 in 2018 to 30,641 in 2019.

“Hybrids have been around for a long time, but I think hybrids have taken off in 2019 and I think there is a greater awareness in the marketplace of low-emission vehicles whether they are electric, plug-in electric or just pure hybrids.”

He added that there was “no reason for me to believe” that the federal government would begin to subsidise low-emission vehicle sales, however the pressing issues of bushfires and drought may force the government’s hand on the issue.

SUVs are expected to continue their market dominance, with the decade just gone proving to be a pivotal one for the high-riding genre.

Overall market share increased from 20.1 per cent 10 years ago to a whopping 45.5 per cent in 2019, with Mr Weber expecting that trend to continue.

Light-commercial vehicles are also tipped to increase in popularity, with three vehicles – the Toyota HiLux, Ford Ranger and Mitsubishi Triton – among the top five most popular models for last year.

As for when new-vehicle sales begin to increase again, Mr Weber said it will happen when buyers develop a greater confidence in the broader economy, which is difficult to monitor and therefore too difficult to accurately predict.