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Australia Autos Report Q4 2010
Business Monitor International, Sep 2010, Pages: 47
Business Monitor International's Australia Autos Report provides industry professionals and strategists, corporate analysts, auto associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Australia's automotive industry.
Last quarter, we forecast that car sales in 2010 in Australia would rise by just short of 4.5% year-on-year (y-o-y), to just below 980,000 units. In the first seven months of this year, new vehicle sales in Australia reached 603,327 units (inclusive of 346,493 passenger cars, 134,445 SUVs and 122,389 other vehicles). If replicated across the whole of 2010, this would result in total new vehicle sales of 1.03mn units. We think that aggregate new vehicle sales in 2010 will actually be slightly higher than this, at 1.05mn This represents y-o-y growth of 12% compared with 2009. Beyond the strong performance in the first seven months of 2010, other factors have motivated this revision to our forecast. Most importantly, there has been a substantial shift in interest rate expectations over the last quarter. Inflation has been more subdued than we had earlier envisaged, meaning that the central bank should not need to hike rates (quite the opposite, in fact – there could be a cut before the end of the year). This should be highly supportive of consumer demand, with sales of big-ticket items – cars among them – benefiting accordingly. Risks to our production, sales, import and export forecasts are finely poised. On the downside, the world could yet experience a double-dip economic downturn, especially if there is a ‘hard landing’ for consumer demand in China. This scenario would result in slower economic growth, job losses and a reversal of the current positive trajectory of consumer demand (and hence domestic auto sales) in Australia. It would also impact car demand across the region, adversely affecting production and exports of new vehicles by Australia. On the upside, the possible adoption of an FCAI-backed subsidy for buyers of new fuel efficient vehicles – involving a proposed AUD2,000 rebate for people trading in old vehicles – could result in new car sales on the domestic market surpassing our current forecast for 2010. The adoption (or rejection) of this rebate proposal will likely depend largely on how much influence the Green party has in any new government, following an August 2010 election which saw neither of the two main political parties secure a parliamentary majority.
Parliamentary influence for the Green party could be a big boost to eco-related vehicle initiatives in Australia. This sub-sector had already benefited from other moderately positive news over the last quarter. Toyota Motor’s locally built Camry Hybrid is making its mark, accounting for around 35% of total Camry sales, according to the company. Total Camry sales rose 22% y-o-y in July as industry sales rose 9.3% y-o-y. Additionally, in June 2010, Australian electricity supplier and retailer EnergyAustralia announced that it would embark on a trial project aimed at retrieving data on the demands an electric vehicle (EV) would place on the electricity grid and determine whether the current infrastructure is able to support such technology (June 2010).
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