Analysis
22 Dec 19

Mixed result for Australian automotive

The Australian fleet industry continues to be a strong and mature business despite a downturn in sales and a slow adoption of alternative fuels.

2019 has seen an 8.2% year-to-date reduction in vehicle sales nationwide according to VFACTS, the official publication of the Federal Chamber of Automotive Industries (FCAI). Passenger vehicle sales continue to fall and are down 16.5% for the year to date, now making up less than a third of vehicles sales, where 10 years ago they formed nearly two-thirds.

Meanwhile the continuing rise of the SUV as the preferred choice for Australian vehicle purchasers continues apace, with SUV now accounting for 45% of all new vehicle sales.

Uneven outcomes

Breaking down sales of fuel types is revealing, with sales of both petrol and diesel vehicles falling (9.7% and 10.1%) but a notable difference in the drop for private sales vs commercial. Private buyers are abandoning diesel much more quickly than commercial with private diesel sales falling by over 15% year-to-date.

Our analysis suggests this is likely due to the inherent reliability and long-life of diesel engines on work and mine sites, a crucial factor in Australian fleets. Drilling down into the data reveals that sales of light commercial diesel vehicles to commercial enterprise has remained fairly stable (-3.3%) in a year that saw diesel vehicles suffer badly.

Fit for purpose fuel

Industry veteran Ed Stanistreet, Vice President of Mobility at Toyota Financial Services, says the slow decline of diesel in this area is a sign of selecting fuel that is ‘fit for purpose’. “It will take some time for alternative fuels to be fully embraced by the general public and by fleet managers. It was almost 20 years for hybrid fuel to be accepted after the release of the Toyota Prius.”

“In the meantime,” he says, “Fleet managers especially will be looking to select the right fuel for the right application. There will be a place for diesel and petrol in the Australian market for some time yet.”

European impact and new fuels

Chris Forbes, National Sales Manager at Kia Australia, says that the phase out of diesel in Europe is having an impact and “that brings a certain level of uncertainty here in Australia.” He’s also concerned about the effect of Europe on other fuels.

“EV & hybrid will continue to grow in government and in some corporates but supply constraints due to harsher EU policies are hindering a larger take up.”

Kia bucks the trend

In a generally poor set of results, Kia has continued to show positive growth with a year to date rise of 3.6% in sales and the only marque in the top ten showing positive sales results. Forbes attributes this to four factors, all on the theme of consistency.

“We offer a range of product that allows us to provide the right vehicle for the right application, we provide competitive whole of life costs, we back this up with a 7 year warranty and, for our fleet customers, we provide consistent pricing all year round.”

Down but not out

The fall in sales in Australian automotive has not been uniform and there are bright patches in an otherwise gloomy landscape. The 2019 downturn comes after longer term growth and many manufacturers will be looking anxiously at 2020 and hoping for a better result.

Image: vehicles ready to transport ore in a mine in Telfer, Western Australia

Author: Shane Curran