The Australian Car Industry Changed in February 2013

A funny thing happened on the way to March 2013 – the Australian car industry changed and it might just be a real, long term change.

We’ve been living with a high dollar (compared to the US dollar) since 2009. I remember looking at my website revenues around that time with SU and seeing them falling because all the advertising money the site earned was charged in US dollars. The ads that I had control over were changed fairly quickly and the site was better off for it.

Car companies sell their vehicles for high prices in Australia. Some of that has to do with this being a faraway market with associated freight costs. Most of it has to do with Australia being a high-cost country to build cars, with high prices for our locally built vehicles leading the public to accept paying more for every vehicle. When Saab launched the new 9-5 the top-spec Aero model sold for around $50,000 in the United States. It sold for close to $100,000 here.

A few things happened in February, however, which indicate that this situation is starting to change. And if the Aussie dollar stays at such a high value for another few years then that change might just end up being permanent.

The first change came from Fiat and Alfa Romeo. The sibling brands both announced drastic price cuts during February. You’ll now pay nearly $8,000 less for certain models of the Alfa Romeo Giulietta, which is now offered for under $30,000 for the first time ever. The Fiat 500 is now offered below $19,000 for the first time ever.

BMW are a little less committed, but they’re moving, too. The company has gone into run-out mode for some soon-to-be-replaced models, but they’ve also announced a whole bunch of added standard equipment for other model ranges. Punters are still going to have to pay what they paid before but BMW can now claim a much more compelling product for the money. On their part, BMW are calling them sales campaigns and limited edition models, but I think that could be simply be some tactical Teutonic talk for more permanent long-term value. Others are doing it and I’m sure BMW will want to remain visible at the progressive end of the market.

February was also the month where Mercedes Benz unveiled their new A-Class here in Australia and much was made of the fact that you can now buy a Mercedes for less than Australia’s staple family car, the Holden Commodore. What’s more, you get more equipment in the Merc than you do in the Commodore. Holden will decry the comparison because the Commodore is a large family car, a completely different class of vehicle to the A-Class. The consumer couldn’t care less. In a market that’s trending away from large family cars into small SUV’s and small hatchbacks, the A-Class is sure to provide a compelling offering to cashed-up youngsters, at-home mothers and all other sorts of buyers. It looks great, it’s reported to drive great, it’s well equipped and it has the cachet of a three-pointed star at the front.

I should mention at this point that the best selling car in the Australian mid-size sedan market in 2012 was the Toyota Camry. The second-best seller wasn’t a Holden, Ford, Hyundai, Mazda or Subaru – it was the Mercedes C-Class.

The final straw for the Australian market as-we-knew-it might just be February sales figures. Here is the Top 10.

Toyota 15,992 (7% up)
Mazda 8728 (0.4% up)
Nissan 8225 (32% up)
Holden 7687 (20% down)
Hyundai 7505 (1% up)
Ford 6590 (5% down)
Volkswagen 4190 (1.4% up)
Honda 3862 (48% up)
Subaru 3104 (3.8% down)

Toyota toppled Holden for sales dominance in Australia 10 years ago and their position at the top of the tree has been a fixture ever since. The rest of the top three has always had at least one of Holden or Ford in there – and often it was both of them. Ford have slipped in recent years and last year it was a HUGE surprise to see Mazda challenge Holden for the #2 position.

These February results – with neither Holden or Ford in the top three – have really thrown the cat amongst the pigeons. Holden claim the result is an anomaly, blaming a computer glitch that stopped dealers from reporting sales. Next month will be the proof.

Two things to note here:

1. This is the first time ever that Nissan has outsold both Holden and Ford in a month. First. Time. Ever.

2. Nissan brought the Pulsar back to Australia in February after a six-year absence for the nameplate. The new Pulsar is spacious for a small car, well equipped, very keenly priced and it’s seen positive reviews. Nissan have also built a good market presence for the Dualis, their small SUV and they’ve also increased their corporate exposure thanks to their entry this year in the V8 SuperCar racing series.

Perhaps their ascension to #3 isn’t a glitch after all.

Australian car buyers are now well aware that we pay a lot for vehicles compared to overseas markets. Car companies are now well aware that they can use their big margins to either cut into price or offer more equipment to make their cars more compelling. The market is finally starting to move and it’s only going to make life harder for the traditional Aussie favourites.

February 2013 could prove to be the month where everything changed in the Australia automotive market – permanently.

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