Market Insight: How the states fared during COVID-19

COVID-19 has spread through business as virulently as it has attacked the community, with the global automotive industry feeling both the direct and indirect ramifications.

Each country has varying degrees of impairment and, within each country, different sectors have different levels of economic and social upheaval.

In Australia, the eight states and territories have been battered but some have felt less impact than others. So here is a look at how the eight zones performed by measuring vehicle sales from the beginning of 2020, through the pandemic and right up to the end of last month.

The vehicle market for the month of August is up about 12 per cent on January 2020, and up a massive 52 per cent on the low point of the COVID-struck nation in April 2020, when the total market was only 38,926 vehicles.

All states and territories suffered that April. While the total market plunged 52 per cent, sales in NSW and Victoria both slid 55 per cent from the previous month.

The ACT fell 55 per cent while sales in Tasmania, Queensland and South Australian halved and WA was down 43 per cent, with the NT suffering even less to sustain a 30 per cent drop.

Back in January 2020, NSW led the nation with 32.6 per cent of vehicle sales and Victoria placed second at 28.35 per cent of the market; a bit over 20,000 units for the month. Queensland accounted for 19.63 per cent.

Less populated states and territories made up the balance, including Western Australia with 9.17 per cent of sales; South Australia with 6.3 per cent; Tasmania at 1.66 per cent; and the Northern Territory at 0.71 per cent.

Lockdowns and restrictions attributed to COVID-19 have dramatically changed the mix. In August 2021, NSW and Victoria were close in sales output with 26.8 per cent and 26.07 per cent of sales allocation respectively.

But the states that enjoyed more freedom took up a lot of the slack, with WA rising to 11.57 per cent of national sales and SA at 7.78 per cent. The Northern Territory lifted its percentage to 0.96 while the ACT, recently hit by lockdowns, plunged to 1.16 per cent.

Queensland has fared well with its share rising to 23.57 per cent in August 2021 on the back of its modest COVID-19 restrictions.

Despite the alarming early sales falls, much of the recovery occurred through June 2020 with NSW and Victoria respectively showing 45 per cent and 52 per cent rebounds over a dull May, and in NSW’s case, a massive 292 per cent rise on the depressed April results.

This shows that the onset of COVID-19 and its most significant and direct effect on the community occurred between March and July of 2020.

What happened directly after was the flow-down from global business retractions related to the pandemic, including automobile production shutdowns, shipping and logistics bottlenecks, showroom closures and the subsequent inability to obtain a regular supply of car parts.

The ongoing shortage of electronic semiconductors was triggered by the auto industry expecting sales to fall and curtailing component supply. While this is industry practice, the sticky bit was that unlike other component suppliers, the electronic manufacturers had other strong markets.

When the car industry called for a slowdown in supply, electronic companies switched to the consumer markets – computers, games consoles, televisions, mobile phones and so on – and found a booming market as buyers stayed home.

This alternative market was so demanding that the electronic suppliers could not flip back to deliver the usual quantity of parts to the car-makers, causing production problems that still exist today.

It indicates that had shipping and logistics levels, and the flow of car parts including electronic chips, been the same as that of early 2020, the current car market could have assumed even more impressive gains.