Now that we’ve officially reached the end of 2017, it’s time to reflect back on the year that was. While a key global theme was electrification, what happened in the local market? As we move into 2018, let’s take the opportunity to reflect back on 2017. Using the VFACTS annual sales data, we’ve summarised some of the main trends we see in the Australian automotive industry, and what we expect to see in 2018.
Australian new car sales have again hit record highs, (just) outperforming 2016, but still not quite reaching 1.2m units. Unlike 2016 however, where we saw SUVs accelerating past the competition, our top growth segments in 2017 also included 4WDs (particularly our market leading Toyota Hilux), and Heavy Commercial vehicles.
The Toyota Hilux again leads the market in 2017, maintaining top position on the back of double digit growth. The Ford Ranger has also taken advantage of weaker small car results to overtake the Corolla and i30, and move into second place overall, also selling more than 40,000 units. Third to fifth place are still held by small cars, with the competitiveness of the SUV market meaning no single model sold enough units to crack the top five (the Mazda CX-5 came closest with 25,831 sales).
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Across the market, and despite a continuing decline, Small cars remain the single largest category, making up almost one in five new cars sold. Growth is however most evident in other areas of the market, with Heavy Commercial vehicles recording substantial growth in 2017. Medium SUVs continue to lead that segment of the market, but with an increasing number of crossovers are launching, Small SUVs could also be a category to watch in 2018.
Across the states, the resources slowdown is again reflected in the West Australian results, while Victoria recorded the strongest year on year growth. Despite a marginal decline, NSW did again record the largest new car sales volumes, making up 33% of the total market.
Despite some areas of the Australian economy recording weaker results in 2017, growth in the automotive market has been driven by non-private buyers, with business and rental fleets both increasing their annual sales volumes.
Reflecting this trend towards business buyers, both light and heavy commercial vehicles have increased their share of volume in 2017. SUVs have also successfully overtaken passenger vehicles to be the predominant segment of the market. With a number of new SUV models either launched in 2017 or announced for 2018, these numbers are likely to continue to grow in 2018, eroding medium and large passenger car sales.
Looking at the top marques, our top four remain unchanged in 2017. Toyota is still the runaway leader, with almost double the sales volumes of its nearest competitor (Mazda). This is despite the closure of its Australian manufacturing operation, and transition to an import-only business. Similarly Holden and Ford both remain strongly positioned, although we’ll be monitoring their sales closely through the first half of 2018, to see whether their updated model lineup continues to resonate with Australian buyers.
Despite Ford, Holden and Toyota all maintaining sales volumes, the proportion of locally made vehicles within Australian new car sales continues to decline. While Japan and Thailand now clearly occupy the top two slots, Hyundai and Kia’s aggressive growth plans mean that Korean-made vehicles could claim a larger share of the market in 2018 and beyond.
Looking ahead to the future, Federal Chamber of Automotive Industries (FCAI) chief executive Tony Weber expects the shift away from traditional passenger vehicles to continue, with SUVs holding onto and even building on their current share of sales “The shift in industry dynamic we observed last year has now become entrenched in our market” said Weber. Looking forward, he believes that “It is a growth pattern that we expect will continue.”
We will be monitoring this shift through 2018 and beyond, as well as looking at trends impacting usage of light and heavy commercial vehicles within the road transport sector, and more broadly within commercial fleets. For more information on this, or to discuss your current business challenges or questions, please contact our automotive experts, Steve Nuttall and Ben Selwyn.