AAAA Dashboard - Q4 2019

AAAA Dashboard Q4 2019

The voice of the independent aftermarket in Australia Welcome to the Q4 2019 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

1.

Current State of the Market

2.

A Year in Review

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3.

LCV’s in Focus

4.

Industry Headlines

1. Current State of the Market

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Australian Economic Indicators Consumer Confidence

95.0

(3.3)

Westpac Melbourne Institute (Q4’19, vs. Q3 ‘19) Consumer confidence continued to fall in Q4, despite repeated RBA rate cuts. Unpacking this further, while consumers commonly have a level of awareness of rate cuts, a commanding majority view them negatively.

Looking to the future, consumer are also somewhat pessimistic about the future of the Australian economy, with scores on this index down 14.2% year-on-year. This will likely continue to be impacted over the year ahead by a lack of certainty around domestic and international conditions.

Fuel Prices

Business Confidence

106.3

(6.7)

Roy Morgan (Q4 ’19, vs. Q3 ‘19)

Business confidence also fell sharply in Q4, with low GDP growth, and low inflation persisting in spite of historically low interest rates (which are also likely to drop further).

Providing context on these numbers, Q3 saw sales volumes in both manufacturing and wholesale trade down slightly relative to Q2. While sales figures are not yet available for Q4, reduced consumer spending and the economic impact of the ongoing bushfires are likely to negatively impact business confidence going forward.

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$1.49

(7c)

AiP - Ave weekly price (Q4 ’19, vs. Q3 ‘19)

Average weekly fuel prices have risen moderately in Q4, following a drop in Q3. This coincides with the AUD/USD exchange rate being weak during Q4. The exchange rate has since picked up, so this trend may reverse during Q1 ‘20.

On the other hand however, changes in Australian fuel retailing off the back of supply relationship reviews, and new market entrants could lead to an increased level of competition, and downward price pressure.

4

New Car Sales By Quarter New car sales fell again in Q4 ‘2019, with 50,000 less vehicles sold than the same period in 2017. While there is a level of uncertainty around sales numbers as VFACTS implements tighter controls on the reporting of demonstrator vehicles, there’s no question that the market remains significantly weaker as we move into 2020.

251,403

340,000

2019 sales volume in Q4

Year-on-Year change

320,000

-8%

300,000 280,000 260,000 240,000

Q1

Q2 Q3 2017

Q4

Q1

Q2 Q3 2018

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Q4

Q1

Q2 Q3 2019

Q4

5

New Car Sales By State Sales were again down across all states and territories, with South Australia in particular well down on its 2018 results (after overperforming in Q3). Ultimately, this consistent weakness across the country suggests consumers and fleets will be holding onto existing vehicles longer.

Q4 Volume

% Chng (YoY)

Q4 Share

New South Wales

79,860

-6%

32%

Victoria

73,190

-8%

29%

Queensland

49,826

-7%

20%

Western Australia

22,499

-5%

9%

South Australia

15,474

-15%

6%

Tasmania

5,305

-6%

2%

Australian Capital Territory

3,511

-17%

1%

Northern Territory

1,738

-16%

1%

251,403

-8%

State

TOTAL Australian Automotive Aftermarket Association Dashboard. Presented by ACA Research. Copyright Š 2020.

6

New Car Sales By Marque Q4 Rank

Make

1

Toyota

21

Q4 Volume

% Chng YoY

Q4 Share

51,251

-2%

20%

Hyundai

19,615

-7%

8%

31

Mitsubishi

18,744

-8%

7%

42

Mazda

18,562

-26%

7%

51

Kia

15,143

13%

6%

61

Ford

14,699

-9%

6%

7

Nissan

12,232

-13%

5%

8

Volkswagen

12,219

-12%

5%

92

Honda

9,658

-12%

4%

101

Subaru

9,306

-21%

4%

TOTAL

251,403

-8%

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TOYOTA -2%

Decline in vehicles sales year on year

A lfall in sales from Mazda has seen a fall of two places to 4th in Q4. Kia was the only brand in the top 10 to improve year on year sales.

Meanwhile, Toyota continues to dominate the market with a minor 2% decline in YOY sales. The largest growth drivers for Toyota were the RAV4 and Camry, both of which are leading their push into hybrid power trains. With almost 25,000 RAV4’s being sold in 2019, it is clear that Australia’s evergrowing affinity to the SUV offers a promising outlook for the popular category in the year ahead.

In 2019: 24,260 RAV4s were sold, a +9.5% increase from 2018.

16,768 Camrys were sold, a +9.8% increase from 2018.

7

2. A Year in Review

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New Car Sales By Buyer Type 476,493

PRIVATE

438,641

BUSINESS

GOVERNMENT

RENTAL

↓7.6%

515,472

↓8.7%

480,696 36,062

↓5.9%

38,322 73,702

↓4.5%

77,195

2019

2019 saw a 7.8% decline in national new car sales. Unpacking that further, we can see that this was off the back of all buyer groups buying significantly less vehicles when compared to the previous year.

This clearly contrasts with the previous year, where big declines in consumer sales (-41,893 sales) were offset by stronger performance among government (-733 sales), business (3,744 sales) and rental (+5,788 sales) fleets.

While this may to a certain extent be explained by corporate buyers holding off for a wider range of vehicles with alternative power trains (e.g. hybrids), weaker business confidence also suggests these results will persist through the bulk of 2020.

2018

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9

New Car Sales By Fuel Type 659,113

PETROL

726,652

332,219

DIESEL

HYBRID

EV*

↓9.3%

369,353

30,641

↓10.1%

↑113.9%

14,328

2,925

↑116.3%

1,352

2019

2018

*Tesla sales are not included in the Electric Vehicles category as they do not publicly report new car sales figures

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Despite Australian dealerships selling approximately 87,000 fewer new vehicles in 2019 than the year before, they did see strong growth in one category.

As we can see here, the number of Hybrid and Electric Vehicles sold has more than doubled year on year, as we see the range of vehicles on offer continuing to grow (and become cheaper).

Looking forward at 2020, this trend will continue, with manufacturers either transitioning to alternative power trains, or adding them as options on their existing range. The biggest constraints here will be the high price of vehicles in Australia, ongoing range anxiety, and issues around availability, with major markets (e.g. Europe) currently taking the bulk of global production volumes.

10

New Car Sales Growth By Brand Despite the downturn in sales, some lesser known Chinese brands have seen significant growth in 2019. These brands seem to be overcoming historical resistance to Chinese-made cars, with improving quality and sharp pricing driving growth.

While this largely skews to SUVs (MG ZS, Haval H2 and H6) or utes (Great Wall Steed), they are also seeing success in other popular categories such as small cars (MG3).

8,326 Sales (↑177%)

1,706 Sales (↑170%)

MG MG3

HAVAL H2

4,017 Sales (↑612%)

918 Sales (↑236%)

MG ZS

HAVAL H6

3,729 Sales (↑120%)

475 Sales (↑164%)

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1,401 Sales (↑79%) Great Wall Steed(4x2)

891 Sales (↑155%) Great Wall Steed(4x4)

510 Sales (↑18%)

11

New Car Sales Growth By Brand Along with the Chinese manufacturers, some brands from the more traditional European and US markets have also managed to buck the trend.

US manufacturer RAM has benefited from Australia’s ongoing love affair with trucks to grow its relationship with Ateco, and build local presence.

European-based Skoda and Volvo both also posted doubledigit sales growth, off the back of standout SUVs such as the Skoda Karoq and Kodiaq, and the Volvo XC40 and XC60.

2,868 Sales (↑297%)

7,001 Sales (↑20.6%)

7,779 Sales (↑16.2%)

RAM 1500 EXPRESS

SKODA KAROQ

VOLVO XC40

1,020 Sales (↑271%)

1,105 Sales (↑127%)

2,858 Sales (↑80%)

RAM 1500 LARAMIE

SKODA KODIAQ

VOLVO XC60

1,589 Sales (↑636%)

2,163 Sales (↑61%)

3,406 Sales (↑20%)

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12

3. LCVs in Focus

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Monthly Vehicle Sales By Vehicle Type NEW CAR SALES BY MONTH (FORECASTED) 60,000 50,000 40,000 30,000 20,000 10,000

Passenger SUV LCV

-

While a significant focus is placed on the growth in SUV sales, Light Commercial Vehicles (LCVs) are also maintaining a similar upward trajectory. As can be seen here, this trend predicts that LCVs will overtake monthly passenger car sales in early 2021, as consumers continue to move away from medium and large cars. While it would take substantially longer for LCVs to overtake passenger vehicles in terms of share of car parc, the Hilux, Ranger, Navara, T60, D-MAX, and many others will continue to become increasingly common in Australian workshops.

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14

Km Travelled By Vehicle Type

The average LCV travelled

16,412 km

AVERAGE KMS TRAVELLED IN 2018 20,000 18,000

Passenger

18,240 16,436

16,000 14,000

+29%

16,175

in 2018

LCV

16,159

15,921

15,782

15,599

+31%

+31%

more than passenger vehicles 12,078

12,000 10,000

That’s

+23%

8,000

+23%

+22%

+23%

+19%

6,000 4,000 +0%

2,000 -

VIC

WA

ACT

NSW

QLD

NT

SA

TAS

Unsurprisingly, given their frequent dual-purpose usage (work and leisure), LCVs also travel much further each year than passenger vehicles. This will impact their servicing needs with consumable items needing to be replenished more frequently than might be the case otherwise. Given many LCVs are owned by fleets, biannual servicing might also be more common to ensure they are fully complying with Chain of Responsibility requirements.

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15

LCV Km Travelled By Usage Type AVERAGE KMS DRIVEN BY LCV IN 2018 BY USAGE TYPE Non-business VIC WA

NT SA TAS

5,651

7,095

5,720

3,972

6,139

5,487 4,174

3,427

16,172

3,005

6,973

5,806

16,436

3,047

5,911

6,962

2,184

18,240

3,960 2,595

7,249

6,315

TOTAL 2,239

5,936

6,540

QLD

Business use unladen 7,539

8,462

ACT NSW

Business use laden

16,159 15,921 15,784 15,599 12,078

Looking specifically at LCV usage, we can see that more than a third is non-business. This is very relevant from a financial perspective, with the ATO announcing that it’s playing closer attention to FBT claims. Within the business use however, we see that the majority of the km travelled involved carrying some form of freight. Workshops need to be aware of this, recognising that these vehicles are being worked hard (particularly in NSW and Victoria), and factoring it into servicing recommendations.

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16

4. Industry Headlines

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Industry Headlines Ford opens first Quick Lane Tyre and Auto Centre, plans for national expansion Ford has opened it’s first Quick Lane tyre and car servicing centre in Hopper’s Crossing, Melbourne, and has announced that they have a growth plan for more such centres across Melbourne and Australia. Quick Lane centres are focused on light, while-you-wait servicing catering to all brands, not just Ford.

Ford plans for Melbourne to be the epicentre of a Quick Lane network which operates independently of Ford dealerships.

Hyundai recalls more than 106,000 i30s in Australia Hyundai Australia has recalled 106,441 i30s over concerns that the driver and/or passenger airbags may deploy at random, as well as the risk of seatbelt pretensioners activating. The issue arose because of the programming of the airbag control unit, and Hyundai expects the models to be fixed via a software update.

Parts sector aims to iron out state roadblocks Two Auto Innovation Centres (AICs) have been opened to address inter-state differences in testing and approving modified vehicles, and to help automotive parts makers develop new parts and accessories in a hi-tech environment that will shorten the industry’s time to market.

AICs will allow parts makers to test and modify their products and are intended to foster closer collaboration between parts makers and regulators.

The centres are intended to help parts makers prove to regulators that their parts are compatible with modern vehicle developments, such as advanced driver assistance systems.

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Daimler to use renewable auto parts Daimler has announced its partnership with Israeli cleantech company, UBQ Materials, to explore its renewable material in the production of automobile parts. It is the first automotive company to partner with UBQ and is promoting its materials across its logistics manufacturers to offset carbon footprint throughout the Daimler supply chain.

UBQ has developed a process to convert unsorted, landfill-destined waste into a renewable, thermoplastic substitute that can be made into everyday goods. Daimler is currently testing and evaluating the incorporation of UBQ in the production of a range of its automobile parts.

2.53 million down and 323,000 vehicles to go in massive Takata safety recall The biggest vehicle safety recall in Australian history has reached 85% completion. The vehicles being recalled are fitted with Takata airbag inflators, which can cause airbags to explode after being exposed to high heat and humidity.

The ACCC has released a statement saying that they are happy with the recall thus far, urging car owners with ‘critical’ airbags to stop driving immediately. Of the remaining 323,000 vehicles an estimated 3,200 are potentially dangerous critical-alpha-equipped vehicles.

Industry-disrupting robotic headlight repairs Plastfix has developed a prototype automated headlight repair system using robotics, software algorithms, 3D scanning and a custom automotive compatible polypropylene-based 3D printing material.

With the successful prototype demonstrating quality repairs of broken headlight tabs, the patented solution is moving towards expanding its repair range and commercialising a more compact automated system that would be affordable and easily utilised in any collision repair facility worldwide.

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

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

Level 6, 107 Mount St North Sydney NSW 2060 Australia +61 (2) 9927 3333

Director - Advocacy, Marketing & Research Australian Automotive Aftermarket Association (AAAA) Convenor: Automotive Products Manufacturers & Exporters Council (APMEC)

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

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Lizzie Dawson

Senior Account Manager ACA Research 0433 708 375 ldawson@acaresearch.com.au