Market share holders

MARKET share is a critical performance indicator for all brands, especially full-line car-makers competing across all the high-volume market segments.

While automotive executives often talk about the importance of profitability over share – arguing that there is no sense in increasing share and losing money at the same time – none of them will deny the importance of growing market share.

Whether times are good and sales are strong, or in an economic downturn when sales are falling, market share remains a significant indicator of how well a major brand is performing.

Having come through an economic downturn, the dramatic improvements in Australian new-vehicle sales compared to last year – which have returned the market to million-unit status for the calendar year – tend to leave overall share overlooked.

From top: Toyota Rukus, Mazda3, Holden Cruze.

But, taken over a year or two as part of a longer trend over the past decade, the figures should send alarm bells ringing in the boardrooms of several major brands, which must attempt to drag back, or at least hang on to, customers who are leaving them for the big share improvers or smaller niche marques.

Toyota remains top dog, but its share has fallen from 23.6 per cent in 2008 to 20.3 per cent so far this year, and a fall below 20 per cent would be the first time that has occurred since 2002, when Toyota last trailed Holden in the annual Australian sales race.

After cracking 200,000 sales in 2004, former Toyota Australia executive chairman John Conomos said the company’s aim was a 25 per cent market share by 2010 – a figure that looked within reach until 2008.

Naturally, Toyota is not standing still, introducing new niche models such as the Rukus in an effort to expand its customer base, but only time will tell just how loyal Toyota customers remain and just how many new buyers the brand can secure in the years ahead.

However, its task looks increasingly difficult while Hyundai, Mazda and Volkswagen, to name three prime movers, continue their upward march.

Holden’s steady fall each year in market share is a telling sign of how much influence it has lost over the past decade. It has dropped from 21.6 per cent in 2002 to 12.8 per cent last year, and is currently at 13.0 for 2010.

Consumers downsizing to smaller cars from those for which the Australian manufacturer is renowned is a big factor in Holden’s steady decline, and an ominous sign for the local industry.

At least Holden can look forward to next year’s expanded and Australian-built Cruze small-car range to compensate for a large-car market that has halved in volume – and shrunk from 38 to just 10 per cent of the total pie – in the last decade.

Ford also has new models coming, but its share has declined this year to just 9.3 per cent – coming off a stagnant three years at 10.3 per cent and, before that, annual declines from 14.2 per cent in 2004. This is a worrying sign for the Blue Oval brand, which had declared it would grow its market share in 2010.

Mazda is holding firm on 8.2 per cent YTD, having increased its share almost every year for more than a decade, and is now working towards a Ford-rivalling 10 per cent share – with around 100,000 sales a year – by 2014. In 2000, Mazda claimed only a 3.5 per cent share of the market.

This was also around the mark Hyundai was left with in 2003 (3.4 per cent), having fallen from 8.3 per cent in 1997, but the Korean brand has steadily climbed back – in a more profitable way – to now be one that commands respect, not least because YTD it owns an 8.0 per cent share.

Hyundai has also targeted a market share of 10 per cent – as soon as 2012 – and has set a mid-term goal to become a top-three automotive brand here.

As full-scale importers, Mitsubishi and Nissan are currently heading in the right direction at 6.0 and 6.1 per cent respectively YTD, although Mitsubishi is a long way from the late 1990s when it had almost twice that market share – such as 11.4 per cent in 1997.

Smaller-line, but still significant, importers in Honda and Subaru have made only modest share increases from a decade ago, but since 2007 Honda has been falling (from 5.8 to 4.0 per cent YTD) while Subaru has climbed (from 3.7 to 4.0 per cent) over the same period.

As well as trying to combat the influence of Mazda, Hyundai and others, Honda and Subaru – as premium Japanese contenders – should be concerned with the likes of Volkswagen.

The German brand is holding down 10th spot in the Australian market but has climbed from less than one per cent in the late 1990s to 3.6 per cent in 2010 YTD. And that should further improve as it enters big new market segments such as 4x4 utilities with the Amarok one-tonner.

While VW in Australia will not follow its parent’s planned domination of the world market by 2018, the German brand looks certain to continue to grow its market share as buyers increasingly look for quality and competence – as well as value – in their vehicles, not just the cheapest price.