Boost the economy, buy a car: FCAI

The Federal Chamber of Automotive Industries (FCAI) has outlined how it sees the car market unfolding over the next 12 months and, while it’s not expecting a complete recovery from nearly two years of decline, there is some good news for buyers and retailers alike.

You could count the number of brands that actually grew sales in 2019 on one hand, with a vast majority reporting negative growth last year, and that overall backward trend has been unchanged for 21 months.

7

But, says the FCAI, the new decade will mark a reversal of fortunes for manufacturers. Don’t expect a return to the glory days just yet, but 2020 will be the year that many brands will see “some” growth.

Speaking to WhichCar, FCAI chief executive Tony Weber said the toughest times were over for new car sales and, while the next 12 months weren’t expected to be record-setting, a small reversal of sales trends would emerge.

“Our prediction for 2020 is a solid year but not great growth,” he said.

Weber didn’t offer a timescale over which the change was expected but said, ultimately “The rebound in the Australian car market will be quite strong. We’ve had 21 negative months but it will turn around.”

Quite what is causing the sales downturn is open to debate, but Weber believes it is not a result of any fault on the manufacturer’s part, instead siting economic variables (wages, household debt, drought, finance reform and now the recent bushfires) as the main contributing factors.

“Consumer confidence is the net product of all those other factors in the economy and when confidence is down, sales tend to fall as well.”

7

But Weber predicts early positive indications in the housing and finance sectors to quickly flow into the stalled car market too.

“What’s really important to confidence in Australia is house prices,” he said. “We’ve seen house prices lift in the last quarters in both Sydney and Melbourne. That is a clear green shoot.

“After the banking royal commission, we could well see finance come back to more moderate levels and that will certainly help stimulate the car industry. I think they’re two really good signs. The economy is not that bad and the fundamentals are still pretty good.

“There will come a time when people will say to themselves, it’s time to change over my car and they will do that.”

But, until there is conclusive evidence that the general new car market is returning to growth, the various brands will be hungrier than ever to make a sale and it’s here that the news is also good for consumers said Weber.

“If you’re in a position as a consumer, this would be one of the best times ever to buy a vehicle. There have to be great deals around.”

Weber's advice aligns with our suggestion to arm yourself with as much research as you can, hit the dealerships, drive a hard bargain, and come away with a great new deal in 2020. Not only is now one of the best times to hunt a hot deal, you’ll also be helping to stimulate the economy and avoid continued economic uncertainty.

7

As for the other major developments expected in 2020, Weber acknowledged the rising popularity of ride sharing services such as Uber. Interestingly, an immediate negative impact on car sales is not the most likely scenario however.

“It is an issue for the future but I don’t think it is playing a significant role at this point in time,” said Weber.

“I can see a future in which ride-sharing will play a greater role but it’s predicated on behavioural and technological change. It’s hard to predict how far in to the future that will be.”

Conversely, Weber said ride-sharing may actually contribute to sales as more people buy cars to participate as virtual franchisees.

“People still have cars, but this (ride-sharing) has more flexibility about what these services provide. It’s an add-on service rather than an alternative to buying a car.”

And, when asked if 2020 will be the year electrified vehicles finally gain a foothold in Australia’s challenging market, Weber’s response was clear.

“No advanced nation in the world will get any higher than 4.0 percent of passenger-based vehicles with electrification before they get to price and range parity. That will be between 2025 and 2030.

7

“If we want to have a quicker uptake of electric vehicles, that needs to be subsidised by the government.”

That said, Weber highlighted a dramatic increase in ‘low emissions’ vehicles and explained their importance as stepping stones to fully electrified cars.

“We need to talk about low-emissions vehicles. In 2019, hybrid car sales increased 119 percent. That’s a significant number because that’s the first significant shift in the Australian market towards low-emissions vehicles.

“That will ultimately impact upon the level of both plug-in hybrid and ultimately electric vehicles”.

Whatever type of car you are looking at or for what purpose, now is looking like the prime time to snap up a new car before the market returns to a more profitable state and potentially diminishes your bargaining power. Happy hunting.