News - Market Insight - Market Insight 2024Market Insight: A million by OctoberAs the economy shifts gear, how did Aus reach a million new-vehicle sales by October?11 Nov 2024 By MATT BROGAN 2024 has so far defied economists’ predictions with year-to-date new-vehicle sales remaining buoyant when compared with the record-setting previous year, but as many predicted, volume appears to be tapering in the run-up to Christmas.
The latest VFACTS figures show a 7.9 per cent fall against the same time in 2023 (October 2024 versus October 2023 new vehicle sales), the cumulative total countering last month’s slowdown thanks in no small part to this year’s first quarter continuing the rapid pace of deliveries experienced during the second half 2023.
Partly due to the 2023’s slow start, followed by a sprint to the finish, in January this year sales rose 5.5 per cent above those for the same period in 2023, while February and March jumped higher again at 17.3 and 11.3 per cent respectively.
The year’s second quarter was nearly as strong. April 2024 sales sat a comfortable 15.5 per cent above those recorded in April 2025 and May a less impressive 4.9 per cent higher than the year prior.
But it was June that saw the market’s first shock. New vehicle sales fell 3.3 per cent year-on-year in the lead up to the end of the financial year, before bouncing back 2.7 per cent in the following month (July 2024).
However, as the year approached its final quarter, we saw a more significant slowing in new-vehicle demand.
August sales dropped 11.6 per cent over those the year prior and September 12.4 per cent. October’s slide was less severe at 7.9 per cent but shows a trend toward a softer end-of-year total when viewed against the preceding year.
Applying that trend to the months ahead – and considering present economic forecasts – it is estimated that November sales will dip to around 108,960 units, a healthy enough number that sees the YTD total remaining better than that in November 2023 (1,134,581 versus 1,118,236).
Carrying the same trend into December, we should expect monthly sales of around 87,757 units – a far lower number than at the same time in 2023 – but one that will still push the calendar year total over that of the preceding year (1,222,338 versus 1,216,780).
All of which means that, despite the doom and gloom, Australia is on track to see another new-vehicle sales record broken in 2024. But just how long can the numbers hold?
While our calculations show 2024 will end on a positive note, the forecast into 2025 is less optimistic.
Economic forecasting undertaken by KPMG predicts low economic growth and weak consumer spending in the second half of the financial year, indicating that new-vehicle sales will remain subdued until at least mid-2025.
With slower prime selling months – particularly May and June – included in that period, we can expect a contraction of new-vehicle sales until at least the end of the 2025 calendar year, and potentially into early 2026.
“We expect Australia’s GDP growth to remain tepid on an aggregate level and moribund on a per-capita basis,” stated KPMG chief economist Dr Brendan Rynne.
“Headline economic activity has only remained positive in recent quarters due to the combination of high levels of net overseas migration and government spending.
“That being said, KPMG believes we are either at the bottom (or close to it) of the current economic cycle and we should begin to see a slight lifting in economic activity, albeit well below historic trends.”
Historically, lower levels of disposable income have resulted in consumers delaying spending on so-called big-ticket items, including new vehicles. It is expected this factor will become more evident over the next 12 to 18 months, with KPMG forecasting subdued consumer spending.
“Our outlook is for the weakness in the private side of the domestic economy to remain in the near term, given worsening disposable household income, and for consumer spending to stay subdued for the foreseeable future,” added Dr Rynne.
“The financial challenges facing many households appears to be worsening as the year progresses, with gross disposable income now growing at a slower pace than households’ use of that income.” |
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