Trend to Small Imports Sends Oz Auto Makers Ominous Signal

CANBERRA – Hidden in last month’s record vehicle sales is a disturbing sign for Australian auto makers – daily sales actually fell.

While March sales rose 0.6% to 87,146 units, according to the Federal Chamber of Automotive Industries, the month was longer than usual with 27 selling days.

This means that on a daily selling basis, sales actually were down 7% to 3,277 units per day compared with March 2005.

Industry analysts fear April will see a sharp drop in sales due to the month’s five weekends and only 25 selling days. This, combined with the slowing daily sales rate, has the industry staring at caution flags.

Adding to these concerns is the fact the slowest performing segments on the Australian market in March were large cars and SUVs – segments that currently represent all locally built vehicles.

Sales of large cars fell 8.3% in March, while sales of small cars – none of them built in Australia – rose 20%. In other words, the Australian-built vehicles missed out in March’s sales growth.

So, while GM Holden Ltd.’s Commodore outsold Ford Motor Co. of Australia Ltd.’s rival Falcon by 5,170 units, to 4,345 units, the Commodore’s sales were down 27% from year-ago. Falcon deliveries tumbled 13.5% year-on-year.

Holden Commodore outsold Ford Falcon but still fell 27% from prior year.

While it can be argued the Commodore’s sales are slowing as buyers wait for its replacement due later this year, GM Holden's overall market share at 16.4% in March was its lowest since 1997.

Ford also saw its Territory SUV sales fall 22% in the month. And while sales of Mitsubishi Motors Australia Ltd.'s new 380 sedan jumped 20% over February, to 1,210 units, the result still fell well short of its 2,200 monthly sales target.

Sales of Toyota Motor Corp. Australia Ltd.’s locally built Camry dropped as well, to 2,790 units in March, as buyers wait for the new model due out later this year. But the company’s successful small cars pushed its sales to a market-leading 18,649 units.

Overall, sales of locally built cars were down 17.5% in March from year-ago, while imports increased their share of the Australian market by three percentage points to 78% from the prior year.

The trend is especially notable when compared with last year’s result, where the Australian market rose 3.5% to a record 988,269 units, but sales of large cars fell 15% to 153,244 units.

By the end of 2005, sales of large cars since 2000 had fallen from 36% of total sales, at 199,000 units, to 25.2% and 153,000 units.

A recent online survey of more than 22,000 Australian owners of SUVs, 6-cyl. and V-8 equipped light vehicles offers domestic auto makers little cheer.

The survey by insurer Budget Direct, part of the international Budget Holdings Ltd. insurance group that administers more than 1.5 million policies and A$1 billion ($729 million) in premium income, found 47.5% of respondents are considering a change to a more fuel-efficient vehicle.

“Manufacturers of 4-wheel drives, as well as (V-8) and 6-cyl. vehicles, are certainly starting to see the ever-increasing negative effects of rising fuel prices, with 2.6% of survey respondents telling us they had already traded their 4WDs for more fuel-efficient cars and 7.5% of (V-8) and 6-cyl. drivers doing the same," Budget Direct CEO Michael Weston says.

“We also asked respondents whether or not the rising fuel prices affected their car usage, to which 48% said ‘no’,” Weston says.”

“However, just over 40% said they had been using their car less often – these respondents could be part of the 47.5% of car owners who are on the verge of downsizing.”

Weston says the results are not surprising because of the increase in fuel prices in the last two years.

"We're not likely to see cheap fuel again in the future,” he says. “I think people are beginning to factor that into their buying decisions, and as a result the big 4WDs and V-8s will suffer over time."

Weston says Australia’s high-income earners largely will be unaffected by fuel price increases, but warns that if fuel costs continue to rise even the wealthy will have to consider using more fuel-efficient vehicles.

"Everybody has a price," he says.