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.

——

Volvo throw down a performance gauntlet – in Australia

Whilst we’re waiting…..

I don’t know how much noise it’s made overseas, but here in Australia, the motoring wires have been buzzing this week due to the arrival of a limited edition Volvo S60 tuned by Volvo’s racing partners, Polestar. This package has been put together specifically for the Australian market and Volvo Cars Australia will only sell 50 of them, each of the cars individually numbered.

A quick description, from the Fairfax press here in Australia:

Under the bonnet is the same 3.0-litre six-cylinder turbocharged engine in the T6 model, albeit tweaked to deliver an extra 18kW of power (242kW or 325hp) and a torque boost of 40Nm (to 480Nm) thanks to software upgrades.

It even matches its donor car’s official fuel use and emissions figures of 10.2 litres per 100 kilometres and 243g/km CO2. We managed 11.3L/100km during our time behind the wheel, including spirited driving through tight, twisting roads around Wollemi National Park in New South Wales.

Despite the performance gains, the official numbers again fail to live up to the car’s real-world abilities. At 5.8 seconds, it might only manage a 0-100km/h time of just 0.3 seconds less than the regular S60 T6, but it’s the Polestar’s impressive rolling acceleration that is likely to have buyers hand over the extra cash.

Unlike the US version, the Australian S60 Polestar is the only one of its kind in the world to receive stiffer springs for even sharper handling over the sporty T6 R Design. The Stateside version doesn’t get the sports exhaust system, bigger wheels or lower ride height either.

It sounds to me like the other Swede might be using us far away Aussies as guinea pigs for a wider rollout. Fair enough.

So why am I writing about an admittedly impressive-sounding Volvo here at Inside Saab?

There was a time, not so long ago, when Saab were the undisputed sporting choice for the Swedish car buyer. This goes right back to the earliest days of Saab, with their lightweight, tossable chassis and high-revving stroker engines. It continued through the days of the 99Turbo, the 900T 16V and even the 9000 Aero and 9-3 Viggen. By those later stages, however, Volvo were beginning to shed their block-of-flats design language and were starting to include some performance versions of their own. I still observe some of those early ‘R’ wagons with a degree of admiration.

Saab’s most recent quasi-performance edition was the 2008 Saab 9-3 Turbo X, a car that received a sitting ovation, mostly due to tamer-than-expected performance attributes. People expected the Turbo X’s output to be significantly raised over the standard 9-3 Aero V6 due to the addition of the XWD system. The truth of the matter turned out to be that the Turbo X was much more about XWD than it was about flat-out performance.

I have a feeling that the enthusiast set – me included – will come to appreciate the Turbo X much more as time passes, because it IS a great performing car on the road, even if the numbers on paper aren’t significantly different to other models. I know whenever I see one that I stop and stare, and my guess is that others do, too.

But back to the point…..

The S60 Polestar is a factory built collaboration between Volvo and Polestar, offered by Volvo Australia with the full Volvo three-year, unlimited kilometer warranty. It’s selling here in Australia for just over A$80,000 (previous S60R models from nearly 10 years ago sold for $20K more than that). All things considered, that’s a decent package.

I’d like to send a challenge out to Saab’s engineers and marketers – let’s not let Volvo have this ground to themselves.

Saab has the perfect performance partner, Hirsch Performance, from Switzerland.

Anyone who’s driven a car enhanced with Hirsch Performance gear knows that it’s a wonderfully integrated package that looks fantastic and drives even better than it looks. I first drove a Hirsch Saab 9-5 around 5 years ago and it was wonderfully, deliciously brutal when you wanted it to be, while still retaining all of the smooth qualities of the 9-5.

Saab has had a lot to contend with in the last two years – the carve-out from General Motors, the launch of the Saab 9-5 and 9-4x, and of course there are the severe troubles that the company has faced during 2011 and the immediate threat we face to our continued existence. We need to focus on getting past these obstacles and getting back on our feet.

I can’t help but think, however, that a project like the integration of Hirsch Performance into our factory offerings would instil a bit more pride, a bit more fight, into the Saab brand once we’re back on our feet. I know there are people in the upper echelon at Saab who are interested in these thoughts, too. As mentioned, though, we’ve just had too much on our plate in recent times to take it further.

We simply can’t let the ball-bearing manufacturers from Gothenburg have the fun side of Swedish motoring all to themselves. Can we?

The good news is that Saab did start working on greater use of Hirsch products with the 9-3 Independence Edition Convertible. I know there have been problems with those being built due to our current circumstances, but it’s still a step in the right direction for greater Saab-Hirsch integration.

The Saab 9-3 Griffin, using the new direct-injected 2.0T engine would be the perfect canvas for Saab and Hirsch to collaborate and produce a feisty product that could get some tongues wagging and a price point comparable to that S60 Polestar.

Just a little food for thought……