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June 2017 Vehicle Sales - Trends in the Australian Automotive Market

The 2016-17 Financial Year has ended, and we are now moving into the new Financial Year. In this report, we will take a look back at the June 2017 VFACTS sales figures, and summarise key trends in the Australian car industry. We'll examine overall sales, look at state-by-state statistics and follow up on some predictions we made in our analysis of the 2016 data from earlier this year.

 The June Figures

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In June 2017, the Australian market showed strong growth, with year-on-year car sales increasing by 4.4%. For perspective, year-on-year growth was 2% for the 2015-2016 calendar year. Historically, June is a particularly good month for automotive sales, with End of Financial Year (EOFY) incentives driving higher volumes of personal and business buying.
 

While higher levels of consumer confidence at this time of year are also often a factor, the stronger sales figures this year run contrary to this. According to Westpac, the Index of Consumer Sentiment fell 1.8% in June 2017, having also declined year-on-year.

 

Western Woes Continue

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Nationwide, June 2017 vehicle sales echo the results seen in the 2015-2016 Calendar Year, with sales increasing across the eastern states. New South Wales once again led in volume, followed by Victoria and Queensland, with Victoria recording the largest year-on-year increase.

Year-on-year, Western Australia was the only state to show a decline in sales volume. Western Australia's continued woes are no surprise, as the state continues to come to terms with the end of the resources boom. Western Australia cashed in as China spent big on building infrastructure, relying heavily on Western Australian steel or iron ore, with the price of iron ore rising from roughly $13 a tonne to a peak price of $177 between 2001 and 2011. Today, the price of iron ore is $57.86 a tonne, with this decline in natural resource prices also sending other economic indicators tumbling (building approvals are down, construction activity has weakened, and retail trade is stagnant).

 

The Rise of the SUV

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In June 2017, the rising Sports Utility Vehicle (SUV) category accounted for the greatest number of vehicle sales, overtaking passenger vehicle sales. Year-on-year, SUV sales rose 3.5% and passenger vehicles declined 3.2%, reflecting the ongoing transformation in consumer tastes.

The increasing appetite for SUVs is further emphasised by carmakers scrambling to get a piece of the pie. With Kia making progress in the Australian SUV market and Audi, BMW, Hyundai, Skoda, and Mercedes all releasing new models this year, we can only expect this already contested market segment to become even more competitive. Technology is moving fast too, which means that we can expect to see a greater number of integrated apps (Android, iOS), and electric and hybrid options making their way to market. Further down the line, the introduction of fully autonomous vehicles seems inevitable, but there will be a lot of red tape to get through, as well as a paradigm shift in the way consumers perceive driving.

Led by the success of the Toyota Hilux, which is the top selling car of June 2017, the Light Commercial Vehicle (LCV) category also continues to grow both in total volume and monthly share. Meanwhile, Heavy Commercial Vehicle (HCV) sales remain relatively flat, barely showing any change when compared to June 2016.

 

Tradies Lead the Way

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At a model level, Toyota and Ford LCV sales have continued their ascension and in June 2017 dominated the market. Toyota Hilux sales increased a massive 18% year-on-year from second place in June 2016 up to first in June 2017. The Ford Ranger also saw a meteoric rise of 24% year on year, storming up from fifth in June 2016 to second in June 2017.

Meanwhile, the Toyota Corolla held third and the Hyundai Tuscon, a mid-sized SUV entrant, took the fourth position. Reflecting the aforementioned change in consumer preferences, the Mazda 3 dropped from fourth in June 2016 down to fifth in June 2017.

With the end of Australian vehicle manufacturing looming, full sized sedans sales from Holden, Ford and Toyota are also falling away. Ford called it a day in October 2016 and in January of this year, both Holden and Toyota announced that they would be closing their doors for the last time in October 2017.

In summary, the June 2017 VFACTS numbers show that Australian vehicle sales remain healthy despite low consumer confidence. Western Australia continues to struggle from its post-mining hangover and as predicted by ACA Research, SUVs have now overtaken passenger cars as the vehicle of choice in Australia. LVC sales continue to rise, and we expect to see sustained growth in this category.

I'll be taking a look at the VFACTS data each month so check back regularly for more updates.

If you want to have a more in-depth conversation about anything Auto or Research related feel free to reach out.

Topics: Automotive Research