New vehicle market not out
New vehicle market not out
October’s new vehicle market reflected the effects of global financial influences, but not to anything like the extent that certain overseas markets have suffered.
New passenger car sales, at 7477 for the month, were 12% up on September, but 5% down on October 2007. New commercial vehicle sales reached 1863, marginally up on September’s level, but 13% below the figure for the same month last year. Both passenger and commercial vehicle sales fell back to approximately October 2005 levels, and the total new vehicle market is now running year-to-date at 2.6% below the first 10 months of 2007.
“It’s nevertheless a pretty good performance considering the economic headwinds,” says Perry Kerr, CEO of the Motor Industry Association. “What’s even more significant is that the industry has finally put the used import era behind it. In October, not only did the number of new passenger cars sold beat the equivalent used import figure by 13%, but it was the first month since July 1994 that new car registrations had exceeded those of used imports.”
Toyota is in an unassailable position for full-year market share with a 30% plus performance in October, and Corolla is streaking away from Commodore, Swift and Falcon as the year-to-date top-selling car model.
Andy Cuming of the Motor Trade Association (MTA) says an opportunity exists for the new car sales market to grow further with the decline of the used import market.
“There is opportunity particularly in the growing small car sector which has shown its ability this year to meet market demand for fuel efficiency by appealing to both new vehicle and used import vehicle customers and the anticipated entry of Chinese products would also strengthen this potential,” says Cuming.
However, Cuming also says that the immediacy of latest economic developments, already evident in recent finance company announcements, highlights the strong headwinds the market will face and the seasonal impact of rental vehicle deliveries in October does mask the reality of the challenge faced by the new car market.
“Excluding rental deliveries, the new car market shrank by 8% in the month compared with 2007. This continued a trend that had been emerging in recent months, even before this latest economic storm.”
Cuming also agreed when asked if smaller, more fuel efficient cars have a significant impact on overall vehicle sales.
“They certainly are, and have been a contributor to the carryover of strong new car sales earlier in 2007 despite general economic indicators saying they should have slowed,” says Cuming.
The availability of excellent well-priced models has perfectly matched the desire of car-owners to beat spiralling fuel costs, and many of these buyers would have advanced buying decisions to move as quickly as possible to maximise savings.
Cuming says fuel costs grab these buyers’ attention, and they soon find that modern automotive technology has provided them a very attractive alternative.
“The perception of what a small car can do had become obsolete,” he says. “The modern small car provides very few compromises versus larger cars. Space, performance and fuel economy are meeting buyer requirements.
“The ‘average’ new car is now lower priced, because it is now a smaller car.”
With Kia and Honda already announcing price increases to their new car models in the near future, the MTA predicts that the market is going to become more price competitive for new vehicle models.
“This trend has been well demonstrated. Of course there will be upward price pressure because of currency movement, material costs, and pressures due to lower returns on smaller car manufacture - but everything will be affected by this more or less equally,” says Cuming.