Make / Model Search

News - Market Insight - Market Insight 2014

Market Insight: Car buyers losing the faith

Corolla-coaster: Toyota’s Corolla was the most popular car in Australia last month, but its sales were down 11.8 per cent compared to August 2013.

Australian car industry could lose billions with fall in consumer buying intentions


Click to see larger images

15 Sep 2014

THE Australian car industry stands to lose billions of dollars in potential revenue as an increasing number of buyers abandon plans to purchase a new vehicle and turn away from the market, according to Roy Morgan Research.

Figures provided to GoAuto this week by the respected research firm show that, for the three months from June through to August, the number of Australians intending to buy a new car in the next four years fell by almost 16 per cent to 2.07 million.

This is down from an all-time high of close to 2.5 million in May and represents the lowest result since August 2011.

In the shorter-term, the number of people planning to purchase a new vehicle in the next 12 months has also declined to 523,000 – 99,000 below the long-term average of 622,000 and well down on May’s result of 721,000.

The figures, which are derived from Roy Morgan’s comprehensive ‘single source’ surveys and do not include fleet, government and rental car purchases, reflect industry new-vehicle sales data that shows the market is now down 2.5 per cent this year, following a 5.5 per cent hit last month.

With survey results for August now accounted for, Roy Morgan Research industry director (automotive) Jordan Pakes said the car industry stands to lose almost $14 billion in revenue unless the market improves.

“Since hitting a record high of close to 2.5 million potential new car buyers in May this year, the industry has taken a substantial hit, with more than 400,000 people deciding to exit the market,” he said.

“With the average new car buyer looking to spend around $34,500 on their next car, this equates to a loss of almost $13.9 billion in potential revenue for the auto industry, unless the market improves soon.

“Given that total new vehicle sales for the industry are already down for the year to date according to VFACTS, these latest car-buying intention results would be of concern.”

Mr Pakes said the decline in car-buying intention has coincided with a strong fall in consumer and business confidence since the Abbott government’s first federal budget was handed down in May.

“The main factor influencing this decline in consumer confidence is a growing proportion of Australians who expect to be worse off this time next year,” Mr Pakes said.

“In addition to the local economic issues worrying many Australians, there have also been a number of major international events such as the unstable situation in the Ukraine – resulting in the downing of MH17 – that are also adversely impacting on consumer certainty.”

The federal government’s commitment of Australian military forces to the US-led campaign against the Islamic State terrorist group is likely to further erode consumer confidence.

According to Roy Morgan, the number of potential car buyers has declined across the board, although the most marked decreases have occurred among the groups it categorises as ‘Getting by’ (young parents or older families with children still at home, typically in the outer suburbs), ‘Today’s families’ (young families in the outer suburbs, living up to their above-average incomes) and ‘Battlers’ (struggling young families, single mums and retirees).

As GoAuto has reported, last month’s VFACTS industry sales figures were dragged down by an 11.2 per cent fall in new passenger vehicle registrations.

The biggest-selling segment, small cars, was down 16.0 per cent for the month, with medium and large cars compounding the issue with a downturn of 19.9 and 22.1 per cent respectively.

Sportscars fared worst of all, down 24.1 per cent for the month, while traditional small SUVs took a 4.1 per cent hit.

Reduced private and business vehicle purchases were largely responsible for the overall downturn last month, down 6.3 and 6.2 per cent respectively, with the biggest hit being felt in the private passenger car segment – down 15.7 per cent compared to the corresponding month last year.

Roy Morgan’s single-source survey results are based on about 1000 interviews covering a range of topics that are held almost every weekend during the year, culminating in more than 50,000 interviews over 12 months.

Read more

Click to share

Click below to follow us on
Facebook  Twitter  Instagram

Market Insight articles

Motor industry news

GoAutoNews is Australia’s number one automotive industry journal covering the latest news, future and new model releases, market trends, industry personnel movements, and international events.

Catch up on all of the latest industry news with this week's edition of GoAutoNews
Click here