Market Insight: Positive note from premium brands

THE big end of town plays a powerful role in the automotive sector, and several premium brands and the key vehicle segments in which they operate are this year providing a significant stabilising influence as the COVID-19 pandemic cripples the overall industry.

After another tough month of trading in May, where total market sales were down 35.3 per cent, the new-vehicle market is now 23.9 per cent in arrears for the year to date and all brands are working overtime to ensure that early signs of recovery – seen through escalating website traffic, for example – translate to meaningful improvements in sales.

Among the top-selling premium brands, BMW has fallen just 6.2 per cent this year (to 9273 units) after another defiant performance in May when its sales were down just 1.9 per cent, while a resurgent Audi – amid a massive model rollout after homologation issues held it back last year – is regaining traction, down 14.7 per cent YTD (to 5202) after a relatively small 4.3 per cent backwards step in May.

Premium market leader Mercedes-Benz Cars has fallen 20.0 per cent this year to 9927 sales, but the German auto giant’s light-commercial vehicles division is only down 9.0 per cent YTD (to 2323), well under the 21.7 per cent decline for LCVs overall and showing a positive underlying strength in fleet and business purchases that bodes well for the post-coronavirus economic recovery.

As we have reported, Ateco Group’s locally converted Ram pick-up truck business is flying thanks to the introduction of the 1500 model, with the high-end US brand pushing up 42.3 per cent last month to be 31.3 per cent in front for the year to date on 1123 sales.

The latest figures also show that Hyundai’s fledgling Genesis luxury brand is up 13.5 per cent this year – albeit based on a two-model range attracting only 42 new registrations in 2020 thus far – while various other more established marques have so far managed to limit the damage to less than 20 per cent for YTD declines.

Of these, Porsche is down only 7.0 per cent for the year to date with 1708 sales, and Ferrari has slipped just 2.9 per cent with 100 deliveries already made to the end of May –  a mere three fewer than at the same point a year ago.

A deep-dive into individual market categories shows that several key premium model segments are in positive territory when the overall class has stumbled badly, while in other areas where there is simply no hiding from the downturns, the prestige players are generally faring much better than their mainstream counterparts.

In the high-volume SUV segments, large SUVs above $70,000 are up 2.0 per cent YTD compared to a 23.7 per cent downturn for the overall category, with the Mercedes-Benz GLE (+465.7%), Audi Q7 (+330.6%) and BMW X6 (+173.5%) among the main contributors to the growth.

Elsewhere, premium small (>$40K) and medium (>$60K) SUVs are running deficits that are slightly better than the overall average – down 6.7 per cent (vs -9.2%) and -18.4 per cent (vs -19.6%) respectively – while upper-large SUVs above $100,000 stand as the only anomaly, down 15.6 per cent YTD against the 8.5 per cent fall for the segment overall.

Among the passenger car classes, prestige small cars above $40,000 are also standing firm, up 1.1 per cent YTD compared to a 30.8 per cent nosedive across the overall segment. The Mercedes-Benz A-Class (+20.1%) and the newly released 2 Series Gran Coupe have had a major impact, along with Nissan’s new premium-positioned Leaf EV (from $49,990).

A couple of lower-volume segments are also keeping in front of the pandemic-led plunge across the market, namely premium upper-large cars over $100,000 which are up 26.5 per cent and plush MPVs over $60,000 that have shot up 32.8 per cent YTD.

As with the SUVs, premium models in other passenger car segments have taken substantial hits, but not quite the wallop delivered to their mainstream counterparts.

These include light cars over $25,000, down 27.0 per cent against a 44.6 per cent dive across the overall class, and large cars over $70,000 which have tumbled 51.1 per cent against 63.6 per cent in total.

Premium mid-size passenger cars above $60,000 are helping drag down the overall category with sales falling 38.6 per cent compared to 31.6 per cent overall, while sportscars, which are arguably all premium cars (even those in the sub-$80,000 bracket), are finding it tough at every turn against the overall sportscar market’s downturn of 36.4 per cent: minus $80K models (-31.5%), over $80K (-46.2%) and over $200K (-30.2%).