Tim O'Brien | Aug 5, 2010

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NEW CAR SALES JULY 2010

July VFACTS figures show a market cooling, especially among business buyers and government, and slower, but holding up, among private buyers.

SUVs again led the market with a massive 29 percent increase over the same period last year. Don’t tell them, but maybe SUV buyers haven’t heard that there is a bit of interest rate uncertainty about and, perhaps more worrying, a poor second quarter performance by the Chinese economy (Bloomberg).

But, whichever way you look at the VFACTS sales data from the Federal Chamber of Automotive Industries (FCAI), the news remains pretty good for car manufacturers and importers.

Softer the market may be, but, with 613,544 sales YTD, still on track for a record year.

In all, the Australian new vehicle market was up 9.3 per cent (or 7,043 vehicles) in July against July 2009. For the month, 82,376 passenger cars, SUVs and commercial vehicles exited showroom floors.

That’s not a shabby result and shows some quite remarkable resilience by Australian consumers, despite some of the negative economic news still blowing in from our trading partners.

As FCAI Chief Executive Andrew McKellar said, “This is a very solid result for July with the start of the new financial year usually resulting in slower sales.”

So, softer numbers were not unexpected. But don’t lay any money out on things picking-up in this month of August.

It will be slow again, thanks this time to the Federal election. It’s simply fact that elections always give business buyers the heebie-jeebies; business hates uncertainty. Most retreat to the trenches until the unpleasantries and squabbling have passed and life can return to normal.

THE TOP TEN

For the record, of the top ten, the state of the nation is much as it was: Toyota on top thanks to a rampant HiLux and strong Corolla and Yaris with 17,250 total sales; Holden not far behind with 10,648; then Ford with 7375 units edging out Mazda from the podium, on 7374 sales, by just one solitary sale.

(No prizes for guessing which companies are going to be asking dealers to register a few more cars on the lot next month.)

What’s changed this month is the loss of steam for the rampant Hyundai – it is up just 4.9 percent on the month compared to the same period last year, underperforming a market up 9.3 percent.

To be fair, Hyundai has been booming and remains up a staggering 35.2 percent YTD.

It's the Getz that's taken a tumble (down 26.4 percent this month), but it's now also competing in Hyundai showrooms with the new i20; and the i30, while still out-performing the market (up 14.1 percent on last year), has slowed on its growth of past months.

An aberration? We will need to wait until next month to see, but in the meantime Mazda has made hay, up 22.4 percent, with the Mazda2 and Mazda3 both up strongly.

It's Suzuki who is riding a silver bullet through the scrum at the moment though, up 56.2 percent for the month with 2004 sales.

For the record, here is the current top ten for year-to-date sales:

  1. Toyota 17,250 sales up 3.5 percent; up 12.5 percent YTD
  2. Holden 10,658 sales up 3.7 percent; up 19.4 percent YTD
  3. Ford 7365 sales down 5.2 percent, up 4.3 percent YTD
  4. Mazda 7364 sales up 22.4 percent, up 12.6 percent YTD
  5. Hyundai 6531 sales up 4.9 percent, up 35.2 percent YTD
  6. Mitsubishi 5029 sales up 20.7 percent, up 19.8 percent YTD
  7. Nissan 4646 sales up 23.7 percent, up 22.0 percent YTD
  8. Subaru 3253 sales up 15.9 percent, up 11.7 percent YTD
  9. Honda 3150 sales up 18.6 percent, up 1.4 percent YTD
  10. Volkswagen 2922 sales up 23.8 percent, up 21.5 percent YTD
  11. Suzuki 2004 sales up 56.2 percent, up 26.9 percent YTD

THE 'ASPIRATIONAL' MARKET

But what’s happening among the fringe-dwellers? Let’s look this month at the ‘aspirational’ market; those brands with a single figure share of sales but offering ‘brand cachet’ to growing numbers of the upwardly mobile.

That means looking almost exclusively at the German juggernauts: BMW, Audi, Mercedes and, at a stretch, Porsche, Jaguar, Land Rover and Lexus. Others, like Citroen, Alfa Romeo and the once-potent SAAB, are falling off the edge of the earth in Australian sales.

Following is the top six among aspirational brands:

  1. Mercedes-Benz 1567 sales up 9.7 percent, up 15.8 percent YTD
  2. BMW 1533 sales up 7.9 percent, up 9.3 percent YTD
  3. Audi 1026 sales up 8.8 percent, up 25.9 percent YTD
  4. Lexus 494 sales up 4.7 percent, up 17.9 percent YTD
  5. Land Rover 409 sales up 20.3 percent, up 33.0 percent YTD
  6. Porsche 154 sales up 54.0 percent, up 3.4 percent YTD

No cigar for Jaguar, it managed just 57 sales for the month, down 12.3 percent.

What’s going on here? And how does anyone understand this end of the market? Sure, there is no surprise in Mercedes and BMW at one and two. Each have very distinct products with very distinct value offerings.

But that is barely true of Volkswagen’s cousin, Audi. Yet, it’s up this month as it was last month, and, year-to-date is up by a considerable 25.9 percent.

Buyers are clearly prepared to pay a premium for brand cachet; something that Audi has in spades.

And which are its top performers? The A3, A4, Q5 and Q7. But what you might notice about that quartet is that three of them are as good as interchangeable with a similar Volkswagen product (the Q5 being the one-out).

The A3 for instance is built on VAG's A5 (or PQ35) platform, shared with the Golf, Jetta, EOS, Caddy and Golf Wagon. The 1.9 turbodiesel is shared with MkV Golf, the 1.8 TFSI 118kW (EA888) shared with Jetta, the 2.0 TFSI quattro 188kW shared with Mk VI Golf R and the 2.0 TDI 125kW (CBBB) shared with Mk VI Golf GTD.

Why then, you might ask, with such shared componentry, does the A3 command its significant price premium?

Take then the A4: it sits on VAG's B8 (or MLB) platform which is only shared with other Audi models (A5, A6, A8, Q5), and has little direct commonality with VW products.

But while that may be the case, in dimensions, performance and ‘feel’, the Passat and Passat CC better or equal the performance of comparable A4 models, yet are considerably cheaper or a match on price.

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Take the storming Passat R36 for instance. With AWD and 220kW/350Nm, at $72,403 driveaway, it is the greater part of $30k cheaper than the $98,034 Audi A4 AWD 3.2i with 195kW/330Nm.

Even the seemly Passat CC with 220kW/350Nm can be had for $73,453 driveaway.

The same price premium is evident at the lower end of the comparable model ranges. The Audi 118T with 118kW/250Nm, for instance, retails at $58,414 driveaway, the Passat 118TSI with 118kW/250Nm at $43,400 driveaway.

The difference, in reality, is the badge and brand perception. Audi: overpriced and over-rated? Maybe, but on its performance in the market over the past three years, buyers seem more than prepared to pay the premium for the ‘four rings’.

TIM O’BRIEN
[email protected]

The Motor Report
A 'top ten' Australian automotive news and reviews website (Nielsen)
'Where smart car buyers begin'

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