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News - Market Insight - Market Insight 2020

Market Insight: Jewels in the car mine

Tough sell: Brands such as Morgan (left) and Caterham (below) have a difficult time turning a profit in Australia.

Low volume cars on knife-edge of customer desire, rising legislation mandates/costs

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30 Nov 2020

ON THE showroom floor in Melbourne’s suburb of Cremorne, a single Morgan sits awaiting delivery to its owner. It is remarkable not because it embodies purist automobile concepts untainted over the 84-year Morgan bloodline, but because it is the last of this line’s Classic models.

 

Legislation governing new vehicles, including emissions and safety but extending to rising homologation costs and mounting taxes and government charges, have simply ended the Morgan line.

 

Morgan, which actually started in 1910 but has followed the steel-chassis Classic theme in its four-wheel models since 1936, has sold five cars this year. Last year it sold 10.

 

Morgan Cars Australia spokesman Chris van Wyk said the Classic has now ceased production and there will be no more.

 

“The three-wheel Morgan is also to end production as the engine doesn’t meet emissions,” he told GoAuto.

 

“The new car that replaces the Classic is not yet ADR compliant and it’s unlikely to go through that process because it’s so expensive for a low-volume car. So it will be available in the UK and Europe but not for markets like the US, Japan or China – let alone Australia.”

 

Mr van Wyk said there is a new model due in 2022 that is “maybe” coming to Australia.

 

He said buyers were very loyal and often the car remained in the family, passed down through generations.

 

“To Morgan owners, the car is an indulgence,” he said.

 

“Owners are often baby-boomer couples who like travel and wine. They would have other cars in the garage, often more practical ones for daily use.”

 

Mr van Wyk is critical of the federal and state taxes and charges applied to new cars in Australia, saying they are a reason for modest sales but moreso for affecting dealerships in states which have additional vehicle taxes.

 

He cited Victoria which has a “super luxury car tax” – actually a higher stamp duty rate on cars valued at more than $100,000 – as crippling state dealers who watch as customers buy from other states that don’t charge extra taxes.

 

“There are a lot of taxes and charges for motorists that make business very hard, including the stamp duty on luxury cars but also on big increases in land tax,” he said.

 

“In the UK, a middle-class family man aged in his 40s could afford a Morgan. Here, the taxes make it impossible.”

 

Why do people get drawn to cars like the Morgan? Mr van Wyk said there was a lot of allure in owning a British car because of the link between Australia and the UK, and because of the rich heritage of brands like Morgan.

 

“Brands respect their heritage and maintain a link with the past,” he said.

 

“This resonates with buyers, especially those who may be baby boomers and have a relationship through their personal history with the UK.

 

“For Morgan, that dedication to its history also reveals itself in its ability to supply parts for all its cars going back to the 1960s and further.”

 

The Morgan marque is an example of the struggle of low-volume brands in a low-volume market such as Australia.

 

It parallels the efforts of other brands including Caterham – also headed by Mr van Wyk – that struggle in a market more associated with mass marketing and cookie-cutter similarities in vehicle brand and design.

 

“Caterham is a labour of love,” he said of the Australian import business. “It doesn’t make money.”

 

Caterham produces only 500 cars a year from its UK factory with output constrained by the bespoke manufacturing process and a keen marketing sense of the size of its audience.

 

“We sell three Catherhams a year because that’s all that the factory has available to us,” Mr van Wyk said.

 

“The Caterham buyer is a boy racer. In some instances, and unlike many other exotic car owners, the Caterham buyer may only have the one car.

 

“So they are customers with passion for the product and very involved with the brand and its motorsport focus.”

 

In 2020 year-to-date, Catherham has sold one car.

 

Newcomer Alpine, a division of Renault, was set for a healthy market based on a history of rally and Le Mans wins in the 1960s and 1970s.

 

It didn’t exactly pan out that way, with only five Renault Alpine A110 units sold this year to the end of October, compared with 18 in the same period in 2019.

 

It now has only one dealer in Australia, Brighton Alpine in Victoria, although has service facilities at all major Renault dealerships.

 

In response, Renault Australia said stocks of Alpine had experienced significant delays because of COVID-19 affecting European factory closures and transit delays.

 

It said it has orders for cars arriving early next year, including customer pre-orders, that it originally hoped for 2020 delivery.

 

But Renault Australia is not dismissive of the brand and is confident it has a positive future ahead.

 

“The future of Alpine is confirmed and we have an exciting announcement to come in early 2021 regarding product,” a spokesman said.

 

“In the coming years, where new Alpine product is relevant to the Australian market we will look to introduce this over time and build upon the brand here.”

 

Renault has been moving for electrification in its model range, partially driven by the availability of the technology from its alliance with Nissan.

 

Earlier this year, Renault design boss Laurens van den Acker, said in an interview with Autocar that “it’s inevitable that we’ll electrify Alpine – and it’s not negative.”

 

“People’s expectations will shift and will push us into this direction. The challenge will be making something electric, which is lightweight.”

 

Renault Australia’s spokesman said: “Alpine is not about being a mass-volume brand but rather offering a unique product that appeals to discerning buyers.

 

“We are confident that we have a fantastic product now and will continue to have in the future to build upon the brand.

 

“From a global point of view, our commitment is firmly behind building on the heritage and strength of the Alpine brand including naming our Formula 1 team Alpine F1 from 2021.”


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