AAAA Dashboard - Q2 2022

DASHBOARD Q2 2022

The voice of the independent aftermarket in Australia Welcome to the Q2 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 and the 2020 and 2022 ACA Fleets Insight Study

1.

State of the Market

2.

Fleet Servicing

3.

EV Sales & Growth

Australian Automotive Aftermarket Association Dashboard. Presented by ACA Research. Copyright © 2022.

4.

Industry Headlines

1. State of the Market

Australian Automotive Aftermarket Association Dashboard. Presented by ACA Research. Copyright © 2022.

Australian Economic Indicators Consumer Confidence

90.9

(9.1)

Westpac Melbourne Institute (Q2’ 22, vs. Q1’ 22) Despite a significant decline in consumer confidence this quarter, it did start relatively well.

Despite a turbulent economic landscape, April remained largely in line with March, posting a modest drop of 0.9% off the back of a (brief) fall in petrol prices and strong labour market results.

Following this optimistic start however, May and June dropped 5.6% and 4.5% respectively, was triggered by a rise in the cost of living, and back to back interest rate hikes. With Australians expecting further increases to come, they remain uncertain of what the future holds.

Fuel Prices

Business Confidence

103.5

(6.1)

Roy Morgan (Q2’ 22, vs. Q1’ 22) Business confidence followed a similar trend to consumer confidence, with declines in May and June linked to rising inflation, and interest rate hikes.

While we did see a relative strong result in April, they have become noticeably more pessimistic about the short to mid-term economic outlook for Australia. Interestingly however, many businesses are still optimistic about their personal growth, with the majority believing that they will be in a better financial position this time next year.

$1.89

( 9c)

AiP - Ave weekly price (Q2’ 22, vs. Q1’ 22) Fuel prices are the main story this quarter, continuing to climb throughout Q2. Despite average prices sitting at $1.89, the weekly national average topped $2.12 for the last week of June. These high prices are a result of global economic conditions following the pandemic, the ongoing war in the Ukraine, and Australia’s US dollar exchange rate.

These record highs are also despite the former federal government reducing fuel excise to 22 cents per litre (which expires in September). With that said, it could be worse - Australia currently has the sixth cheapest fuel prices amongst OECD countries.

Australian Automotive Aftermarket Association Dashboard. Presented by ACA Research. Copyright © 2022.

4

New Vehicle Sales by Quarter Despite posting a 3rd consecutive quarter of growth, Q2 new vehicles sales still lie below historic performance for the quarter (omitting the pandemic-impacted 2020 results). All three individual months saw significant declines on monthly averages (omitting 2020), the worst of which was June, whose figure of 99,974 new vehicle sales was down 21.5% on the five-year average of 127,300.

Despite high levels of demand, car makers globally are still struggling with intermittent manufacturing capability off the back of COVID-19 shutdowns, and ongoing shortages in microprocessors and other critical inputs.

275,422

2022 sales volume in Q2

-9%

400,000

303,820

285,928

300,000

Year-on-Year

209,054 200,000 100,000 0

Q1

Q2 Q3 2019

Q4

Q1

Q2 Q3 2020

Q4

Australian Automotive Aftermarket Association Dashboard. Presented by ACA Research. Copyright © 2022.

Q1

Q2 Q3 2021

Q4

Q1 Q2 2022

5

New Vehicle Sales by State Looking around the states and territories, it is evident that market declines were felt equally across the equally, with the 5% YoY increase for the Northern Territory the only exception.

With that said, we are seeing a level of recovery compared to the previous quarter. Whilst average wait times for new vehicles continue to sit around 6-months (~155 days), dealerships across the country will hope that continued improvement will let them achieve 4 consecutive quarters of growth.

Q2 Volume

% Chng (YoY)

Q2 Share

New South Wales

88,216

-9%

32%

Victoria

72,267

-8%

26%

Queensland

58,404

-12%

21%

Western Australia

27,062

-11%

10%

South Australia

17,771

-8%

6%

Tasmania

4,689

-11%

2%

Australian Capital Territory

4,054

-12%

1%

Northern Territory

2,959

5%

1%

275,422

-9%

State

TOTAL

Australian Automotive Aftermarket Association Dashboard.

Presented by ACA Research. Copyright © 2022.

6

New Vehicle Sales By Marque Q2 vs Q1 Rank

Toyota

Make

Q2 Volume

% Chng YoY

Q2 Share

Toyota

63,330

-9%

23%

2 2

Kia

21,967

6%

8%

3 2

Hyundai

20,874

7%

8%

4 2

Mazda

20,097

-39%

7%

5 2

Mitsubishi

18,395

-6%

7%

6

Ford

15,179

-31%

6%

7

MG

13,240

22%

5%

Moving down the top 10, we are tracking some interesting stories :

8

Isuzu Ute

9,983

-7%

4%

Subaru

8,845

-12%

3%

▪ A new top three has emerged, with Kia and Hyundai replacing Mazda and Mitsubishi off the back of a more secure supply chain.

Mercedes-Benz

8,498

6%

3%

TOTAL

262,436

-9%

1

9 1 10

2

Australian Automotive Aftermarket Association Dashboard. Presented by ACA Research. Copyright © 2022.

63,330 vehicles sold Despite ongoing supply chain issues (and a 9% drop YoY), Toyota continues its dominance of the Australian automotive market, responsible for almost one in four vehicles sold through the quarter. It is still the clear market leader, with almost triple the volume of any competitor.

▪ MG continues to produce strong results (up 22% YoY) as it closes on Ford in 6th position.

▪ Mercedes-Benz demonstrates the strength of the premium market, climbing into the top 10 with a 6% YoY improvement.

7

2. Fleet Servicing

Australian Automotive Aftermarket Association Dashboard. Presented by ACA Research. Copyright © 2022.

Scheduled Servicing and Tyre Repair

The 2022 ACA Research Fleet Insights program has given us an insight into how fleets are servicing and maintaining their vehicles. From a workshop perspective, this provides valuable intelligence into the types of services that fleets are likely to be seeking from the aftermarket.

(Insights from ACA Research’s 2020 and 2022 Fleet Insights Study)

Where would you typically take your fleet vehicles for…?

AFTERMARKET

52%

52% 80%

IN-HOUSE

DEALERSHIP

8%

40%

2020

79%

5%

43%

2022

SCHEDULED SERVICING AND MAINTENANCE

3%

7%

17%

14%

2020

2022

Firstly, we can see that their behavior has remained relatively consistent over time, with aftermarket workshops outperforming franchised dealers when it comes to gaining business from fleets.

Importantly though, while just over half choose independent or chain workshops for scheduled servicing (where many would choose a franchise dealer within warranty), almost 4 out of 5 fleet managers opt to take their tyre business to an aftermarket workshop.

TYRE REPLACEMENT/REPAIR

Australian Automotive Aftermarket Association Dashboard. Presented by ACA Research. Copyright © 2022.

9

Mechanical and Smash Repairs (Insights from ACA Research’s 2022 Fleet Insight Study)

Where would you typically take your fleet vehicles for…?

AFTERMARKET

We see a similar trend for mechanical and smash repairs.

Looking at the split between these two types of service, aftermarket workshops just hold the upper hand regarding mechanical repairs, showing that dealership workshops still hold a trusted position.

8%

However, the split for smash repairs shows a much larger disparity, with almost 4 in 5 fleet managers preferring aftermarket workshops to dealerships or in-house operations.

39%

This demonstrates the extent to which the smash repair market is dominated by specialist aftermarket workshops.

53% 74%

IN-HOUSE

DEALERSHIP

8% 18%

M E C H A N I C A L R E PA I R S

S M A S H R E PA I R S

Australian Automotive Aftermarket Association Dashboard. Presented by ACA Research. Copyright © 2022.

10

3. EV Sales & Growth

Australian Automotive Aftermarket Association Dashboard. Presented by ACA Research. Copyright © 2022.

EV New Vehicle Sales Vehicle Type

Electric vehicle sales represent just 3% of total Q2 sales but are up 597% from Q1 2021 (despite a decline in the total market).

Q1 Volume

% Chng YoY

Q1 Share

Petrol

39,868

-23%

14.5%

Diesel

2,823

41%

1.0%

Hybrid

7,010

-4%

2.6%

Electric

1,339

213%

0.5%

PHEV

103

-5%

0.04%

Hydrogen

3

-57%

0%

Petrol

94,787

-13%

34.4%

Diesel

34,624

5%

12.6%

Q2 Rank

Passenger

Total

Q2 Total EV Sales 2,928 Q2 Volume

Q2 Share

Polestar 2

447

15%

2

Volvo XC40 Electric

374

13%

3

Hyundai Kona Electric

252

9%

4

Tesla Model 3

236

8%

5

Hyundai Ioniq 5

188

6%

Hybrid

13,561

2%

4.9%

Electric

1,574

97%

0.6%

1

PHEV

1,790

155%

0.7%

Hydrogen

0

0%

0%

Petrol

5,823

20%

2.1%

Diesel

59,178

-14%

21.5%

Electric

15

-21%

0%

275,422

-9%

SUV

Light Commercial

Looking at the top 5 electric vehicles sold, we can also see significant change; Polestar 2 has claimed top spot off the back of an impressive quarter. Whilst Tesla boasted an impressive figure of 4,417 deliveries in Q1, this dropped significantly in Q2 as they focused their efforts on other markets.

Fuel Type

Australian Automotive Aftermarket Association Dashboard. Presented by ACA Research. Copyright © 2022.

Model

12

EV Car Parc and Projections

Electric vehicles’ share of the car parc has grown almost tenfold over the past 8 years, climbing from 2,976 vehicles in 2013 to 20,310 vehicles in 2021.

We can see though that whilst electric vehicle registrations grew by more than 50% in the last year, they still only represent 0.1% of the total car parc.

25,000

EV Growth & Percentage of Total Car Parc (Source: ABS)

0.11% 20,000

15,000

Registered Electric Vehicles

They are still a minor consideration in absolute terms, but this increase gives a good indication as to the current trajectory for electric vehicles, particularly as a wider range of more affordable models are introduced into the market.

0.07% Fuel Type

10,000

0.05%

0.04% 0.03% 5,000

0.02%

0.02%

0.04%

0.02%

2013

2015

2017

2019

2021

2021 Share

YoY Change

Petrol

13,453,001 13,477,850 73.4%

0.2%

Diesel

4,288,791 4,525,713

24.6%

5.5%

Hybrid

145,725

132,248

0.7%

-9.2%

LPG/Other Gases

98,015

89,538

0.5%

-8.6%

Electric

12,842

20,310

0.1%

58.2%

Other/Unknown

87,891

124,475

0.7%

41.6%

-

1.6%

Total

-

2020

18,086,265 18,370,134

2021

Australian Automotive Aftermarket Association Dashboard. Presented by ACA Research. Copyright © 2022.

13

4. Industry Headlines

Australian Automotive Aftermarket Association Dashboard. Presented by ACA Research. Copyright © 2022.

Industry Headlines New acquisition for 4X4 aftermarket auto accessories group Aeroklas Asia Pacific Group (AAPG) has recently completed it fourth strategic acquisition in the Australian 4X4 automotive accessories market, placing it amongst some of the industry’s largest players. On July 1st, AAPG acquired 100% shareholding in 4 Way Suspension Products Pty Ltd. These acquisitions represent an overall investment in the Australian automotive parts manufacturing sector of over $100M in the last seven years and the company plans to continue to grow both locally and within the lucrative Asian, US and European markets.

‘Genuine parts’: Car brands and the aftermarket face off The representative body for Australia’s car brands says people ought to have more transparency and choice around the use of so-called “non-genuine parts” by insurers and repairers. The FCAI has a long-running campaign called ‘Genuine is Best’, designed to promote parts made or supplied by the car brands. However, the Australian Automotive Aftermarket Association has hit back, telling CarExpert the notion that manufacturer-branded parts are automatically superior to aftermarket alternatives may lead to “unfounded fear and apprehension for the vehicle owner”.

Cangoee powers into aftermarket: Intelligent power storage system ready to take on Aussie off-grid market Australians who enjoy taking their cars on adventures will now have a more intelligent and integrated off-grid power system that can be used on their campsites, caravans and 4WD thanks to the new technology developed by Canogee Australia. The dual-battery system was developed by director and former Toyota engineer, Andrew Holden who has upwards of 20 years of experience.

Apprentices exposed: Vital survey reveals apprentices are in auto jobs for the long haul On the back the ground-breaking survey of apprentices within the automotive industry, it can be seen that the majority of apprentices who enter the industry enjoy their work and intend to stay long turn. The survey was down in collaboration between AAAA, the AADA and the MTA in order to understand the driving factors as to why apprentices enter/leave the industry to help combat the skills shortage.

A new era for the aftermarket The MVIS is the first law of its kind in the Southern Hemisphere, enabling a fair and level playing field for independent workshops and will ensure consumers have a choice of repairer. The day-to-day responsibility of the scheme and access to manufacturer vehicle information will be handled by the Australian Automotive Service and Repair Authority (AASRA). There will be a subscription hub to access the information, providing a single location to easily and quickly access all of the participating manufacturer portals, which cover over 90% of the vehicles that are sold in Australia today.

GUD Holdings hitches wagon to Electric Vehicles Whilst the 5 year trend of GUD’s share price has been relatively stagnant, commentary at the recent investor day may be cause for optimism. The company has recently made various acquisitions such as the purchase of AutoPacific Group to strengthen exposure in the 4WD and trailer accessories segment, as well as Vision X to provide exposure to automotive and commercial lighting. Further, these two companies reduce exposure to internal combustion vehicles, helping offset the threat from electrification.

Australian Automotive Aftermarket Association Dashboard. Presented by ACA Research. Copyright © 2022.

15

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

Account Executive 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

Australian Automotive Aftermarket Association Dashboard. Presented by ACA Research. Copyright © 2022.