While the election had been mooted as a potential turning point for the new car industry, the sales data for May has yet to indicate there will be any sudden turnaround. Combined with ongoing talk around interest rate levels, the industry appears to be at a delicate juncture.
Total new car sales
Across May new car sales dropped 8.1% compared with the same month the year prior. On an absolute basis, this number was recorded as 92,561 vehicles, versus 100,754 in May 2018. With another month of declining car sales that brings the number of consecutive months in which sales have slid, to fourteen.
Up until May year-to-date sales were also tracking at a reduction of 8.1%, so the drop was quite fitting with respect to this trend. Tasmania is the only state to defy the trend this year, strengthening its positive year-on-year sales growth (2.2%) by way of a 5.5% increase in new cars sold throughout May.
Some of the key factors believed to be attributable to the dour run of results include tighter financial lending criteria, poor market sentiment, subdued economic growth, and a drought affecting farmers.
New car sales by segment
A total of 40,937 SUVs were bought during May, the equivalent of 44.2% market share. While the volume sold was down modestly compared with the same month last year, the changes relative to the other major vehicle categories suggest SUVs have not been hit as hard as their counterparts. For proof of this, it’s worth looking closer at the passenger vehicle segment, where 28,890 units sold. This is down 11.9%. Similarly, the light commercial category was 9% lower, with 19,178 vehicle purchases logged.
Among passenger vehicles, nearly half of all sales (48%) in this segment are considered small cars, suggesting Australians are focused on value. Those eyeing a sedan or coupe are likely to be working with a tight budget, and it also explains the success we’ve seen with the likes of Kia in 2019. With SUVs, the largest share of sales (37%) have come from the mid-size category under $60k, which suggests a little more discretionary spending power here that favours interior cabin space. And of course, to round things out, there is little surprise that three quarters of all light commercial sales are pick-up and cab chassis 4x4s.
Stay tuned for Part 2 of our review into new car sales for May 2019, covering vehicle makes and models.