AAAA Dashboard - Q1 2022

DASHBOARD Q1 2022

The voice of the independent aftermarket in Australia Welcome to the Q1 2022 Edition of the Aftermarket Dashboard, a quarterly information service for members of the AAAA. This industry publication captures useful statistical and related data, as indicators of the unfolding trends and health of the automotive aftermarket industry, and has been designed to provide regular insight on our industry.

We value your suggestions for improvement or feedback regarding content.

Data sourced from VFACTS New Car Sales Data, ABS Motor Vehicle Census, ACA Research Consumer Automotive Survey and the ACA Economic Playbook

1.

State of the Market

2.

Used Vehicle Volumes & Pricing

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3.

Labour Insights

4.

Industry Headlines

1. State of the Market

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Australian Economic Indicators Consumer Confidence

100

(4.7)

Westpac Melbourne Institute (Q1’ 22, vs. Q4’ 21) Despite a fairly resilient result in January, consumer confidence continues to decline in February and March on the back of high Omicron case numbers.

This is however, just one factor at play here, as we face a perfect storm of national and global events.

Locally, the east coast floods, and ongoing concerns around housing affordability have worried the everyday consumer, while increasing tensions off the back of the Russia-Ukraine war and inflationary pressure on cost of living is leaving consumers uncertain about what’s ahead.

Fuel Prices

Business Confidence

109.6

(6.6)

Roy Morgan (Q1’ 22, vs. Q4’ 21) Whilst some may have thought the easing of restrictions around the states and commencement of international travel would lead to higher business confidence, the floods and Russia-Ukraine war have hindered business optimism.

Looking deeper, February surprisingly recorded the highest single-month figure since June 2020. This was however undermined by a poor result in March off the back of concerns around global conflict.

Unfortunately, it seems that a level of pessimism will persist amongst Australian business until the economic landscape clears.

$1.80

( 17c)

AiP - Ave weekly price (Q1’ 22, vs. Q4’ 21) This quarter has seen a rapid increase in global oil prices off the back of two key factors: the conflict in Ukraine (and subsequent sanctions on Russian trade) and the demand for oil following the pandemic.

Although Russia doesn’t contribute significantly to Australia oil supplies, their role in the market at an overall level means the sanctions have a large influence on global activity.

This has again highlighted the ongoing conversation around sovereign fuel supplies in Australia, with the ACCC has recognising that the increased demand as travel resumes is not being met by global supply.

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4

New Vehicle Sales by Quarter The first quarter of 2022 saw a relatively strong result, breaking the trend of consecutive declining quarters in the second half of 2021. The month of March led this recovery, with the 101,233 new motor vehicles sold making this the strongest March result since the record high in 2018.

The spike at the end of Q1 was predominantly driven by dealers being able to fulfil orders dating back to 2021. Despite this, delivery slowdowns are still impacting the market, with the number of new vehicles sold largely dictated by supply availability, as against demand.

262,436

2022 sales volume in Q1

0%

400,000

Year-on-Year 300,000

268,538

263,648

233,361

200,000 100,000 0

Q1

Q2 Q3 2019

Q4

Q1

Q2 Q3 2020

Q4

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Q1

Q2 Q3 2021

Q4

Q1 2022

5

New Vehicle Sales by State Despite a strong result in the first quarter of 2022, there has been relatively little change in the distribution of new vehicle sales around the country when compared to Q1 of 2021. The most interesting figure would be the 13% YoY increase for Tasmania. It is impressive to see this relatively small state produce such strong results as we continue to face challenges around international supply.

Looking ahead to the rest of 2022, all states will be looking to bounce back to pre-pandemic sales figures as the restrictions continue to ease, and the vehicle availability begins to increase. The concern here is ongoing uncertainty around global production, with current estimates pushing the recovery later in 2022, or even into H1 2023.

Q1 Volume

% Chng (YoY)

Q1 Share

New South Wales

81,619

-4%

31%

Victoria

69,729

3%

27%

Queensland

56,599

0%

22%

Western Australia

26,003

-1%

10%

South Australia

17,360

2%

7%

Tasmania

4,797

13%

2%

Australian Capital Territory

4,091

-6%

2%

Northern Territory

2,238

-6%

1%

262,436

0%

State

TOTAL

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6

New Vehicle Sales By Marque Q1 Rank

Make 2022

Q1 Volume

% Chng YoY

Q Share

1

Toyota

58,047

3%

22%

2 1

Mazda

29,835

8%

11%

3 2

Mitsubishi

23,353

31%

9%

4 2

Kia

17,452

2%

7%

5 3

Hyundai

17,293

-9%

7%

6 2

Ford

13,383

-15%

5%

7

MG

11,267

29%

4%

8 3

Isuzu Ute

8,806

9%

3%

9 1

Nissan

8,322

-31%

3%

10

Subaru

8,152

-19%

3%

TOTAL

262,436

0%

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Toyota 58,047 vehicles sold Continuing its dominance of the Australian automotive market, Toyota is still a clear market leader. Despite also facing supply issues, the car manufacturer maintains more than double the share of any competitor, with just over 1 in 5 vehicles sold throughout Q1 being a Toyota.

Moving down the top 10, we can see significantly levels of movement: ▪ Isuzu Ute is the largest climber, breaking into the top 10 reflecting the continuing growth of its products (and the broader Light Commercial category) in Australia.

▪ The two noticeable increase in sales were Mitsubishi and MG, increasing sales by 31% and 29% respectively YoY. ▪ Volkswagen sales declined 33% YoY of which saw the manufacturer drop out of the top 10 to the 11th spot.

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2. Used Vehicle Volumes & Pricing

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Through the course of the pandemic, Australia’s new vehicle market has been significantly affected by global supply issues. As a result, used vehicles have been increasingly popular, with prices up more than 50% from pre-pandemic as consumers and fleets look to avoid the significant wait times they might otherwise face.

Used Vehicle Listings (Insights from ACA Research’s Economic Playbook)

Used Car Listings by State

180,000

(Source: carsales.com.au)

160,000

Looking at the breakdown of used car listings by state (sourced from Carsales), we can see that in the eight months from June 2020, the volume of listings fell by almost a third (from 160k to 110k), hitting a 2 year low in January of 2021.

140,000 120,000 100,000

Despite continuing high demand, the used vehicle supply did improve through 2021, climbing back above 150,000 listings by September of 2021. This was however clearly not sustainable, with a downward trend again visible as we move into 2022.

80,000 60,000 40,000 20,000 -

NSW

VIC

QLD

SA

WA

NT

ACT

TAS

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With new vehicle supply likely to remain inconsistent through 2022, the Australian auto market is going to be dictated by supply for a while yet. From an aftermarket perspective, this is clearly an opportunity, with those consumers turning to used vehicles likely to be open to considering an independent or chain workshop.

9

Taking a closer look at the data, it is interesting to see the split between dealer and private seller listings. Whilst the gap was only 8,226 vehicles in June of 2020, this had grown to almost 30,000 by the end of the year as consumers tapped into the private market. Conversely, dealerships were able to maintain supply volumes through an increased emphasis on trade-ins and ex-fleet vehicles (where possible).

Dealer vs Private Seller (Insights from ACA Research’s Economic Playbook)

Used Car Listings (Source: carsales.com.au)

80,000

66,484

70,000

Moving into 2022 we can however see them struggling to maintain supply, with the gap back under 10,000 vehicles. This is further highlighted by the continuing decline in availability for demo and near new vehicles. As seen in the graph, these have steadily declined from a 2-year high of 19,249 in June 2020 to a 2-year low of 8,341 in March 2022.

60,000 50,000 40,000

33,517

30,000

19,249 20,000

8,341

10,000 -

Jun-20

Aug-20

Oct-20

Dec-20

Dealer used

Feb-21

Apr-21

Private seller used

Jun-21

Aug-21

Oct-21

Dec-21

Feb-22

Ultimately, the key point here is that dealerships will have sold a significant volume of used vehicles over the past two years, and will have more of a relationship with owners than might usually be the case. As a result, while there is still an opportunity for the aftermarket, we can expect a greater level of competition from dealerships than might typically be the case.

Demo and near new

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10

3. Labour Insights

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Industry Wide Skills Shortage (Insights from ACA Research’s Economic Playbook)

35,000

Number of Job Listings

Trades & Services

(Source: seek.com.au)

30,000

25,000

Manufacturing, Transport & Logistics

20,000

It is no secret that the aftermarket is facing a significant skills shortage, with an estimated lack of 25,000 qualified technicians as of today. We can however forget that this also applies to other industries, which re seriously hurting due to the lack of skilled workers. While these are not new issues, the lack of skilled migration, as well as restrictions on international students and backpackers have particularly brought this to light.

From an aftermarket perspective, this creates an increasingly competitive environment for existing employees. As a result, we need to work harder to keep them in our businesses, given their options don’t just extend to the workshop down the road, but also adjacent opportunities like manufacturing or mining.

May-20

Apr-22

% Change

Manufacturing, Transport & Logistics

4,446

21,361

380%

Construction

2,950

8,509

188%

8,142

30,906

279%

3,288

6,929

111%

18,826

67,705

260%

Industry

15,000

10,000

Construction Mining, Resources & Energy

5,000

Trades & Services (includes automotive technicians) Mining, Resources & Energy Total (selected industries)

0 May-20

Jul-20

Sep-20

Nov-20

Jan-21

Mar-21

May-21

Jul-21

Sep-21

Nov-21

Jan-22

Mar-22

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12

4. Industry Headlines

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Industry Headlines New car delays blow out by 250 percent The average waiting time for a new across Australia has increased from 36 days to 126 days since January 2020. Jaguar Land Rover top the list for wait time with an average 218-day wait, followed by Volvo (199), Izuzu (189), Toyota (180) and Kia (173). The article explains that there is a good chance that waiting times have peaked with numbers slightly declining from December of 2021. On the other hand, Peugeot currently lead the manufactures with only a 42 day wait time, followed by Honda (55) and MG (60).

“We’re not behind:” Tim Wilson’s optimism on Australian EV uptake defies the evidence Tim Wilson has rejected the assertions that Australia has fallen behind on the international landscape in respects to electric vehicle uptake and insists that Australia is only lagging “smaller countries”. This however goes against the data released by the Electric Vehicle Council as some larger countries, such as Germany, France and the United Kingdom are leaving Australia behind regarding the shift to electric vehicles with a market share of above 10%.

German filter giant M+H eyes Australia for expanded warehousing, product lines The German filtration company, Mann+Hummel is looking to the future, with innovation coming to develop cabin filters for electric vehicles. This new product will draw minimal energy from the batteries of EV’s to ensure long range, and for for fuel-cell drivetrains that need filters for the ion-exchange unit and for the wastewater. The company is also developing smart filters that saves energy by only filtering as much air as is needed.

Continental Recognized For Commitment To Sustainability Continental has recently announced it was awarded the highest grade for the fourth time in a row as a global leader in reducing emissions in the supply chain. This recognition makes the manufacturing company one of the 8% of companies that were awarded the highest grade for a supplier who has committed to making a positive impact upon climate change.

East Coast Bullbar’s LC300 steel and alloy bullbar range is market-ready Australia’s oldest bulbar company, East Coast Bullbar’s (ECB) are ready to launch the LC300 steel and alloy bulbar range. The new product is designed and engineered to complement the vehicles complex safety tech whilst also ensuring that the level of safety expected by the buyer expects. Following East Coast Bullbars acquisition by GUD back in 2020, the company has been able to go from strength to strength by producing high quality products.

Organisers ecstatic over Expo return Between the 7th and 9th of April, the Australian Automotive Aftermarket Association were pleased to see thousands of trade visitors reconnect and network in person after 3 long years and experience over 270 of the industries leading brands.. Based upon the theme of “The Future is Here”, the expo featured various seminars that focused upon key industry topics such as the mandatory data sharing, the ongoing skills shortage as well as electric vehicles.

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About AAAA

About ACA Research

The Australian Automotive Aftermarket Association, is the national industry association representing manufacturers, distributors, wholesalers, importers and retailers of automotive parts and accessories, tools and equipment, as well as providers of vehicle service, repair and modification services in Australia.

With over 20 years of automotive experience, ACA Research has developed a detailed understanding of the automotive sector, Using this market knowledge, we design and deliver research that helps our clients understand and overcome their business issues, empowering them to move forward with confidence.

For more information, please contact:

For more information, please contact:

Lesley Yates

Ben Selwyn

Matthew Beatty

Director of Government Relations and Advocacy Australian Automotive Aftermarket Association (AAAA) Convenor: Automotive Products Manufacturers & Exporters Council (APMEC)

Director ACA Research 0411 132 166 bselwyn@acaresearch.com.au

Graduate Researcher ACA Research 0467 243 525 mbeatty@acaresearch.com.au

7-8 Bastow Place Mulgrave VIC 3170 Australia +61 (3) 9545 3333 | 0402 005 476 lyates@aaaa.com.au

Level 6, 54 Miller St North Sydney NSW 2060 Australia +61 (2) 9927 3333

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