The transit of Venus was not the only remarkable event yesterday.
The release of the National Accounts by the Australian Bureau of Statistics (ABS) showing a seasonally adjusted annualised growth rate of 4.3 percent - a result which contradicted the prevailing 'gut instinct' as to the state of the economy and had nearly everyone running to the windows for a look.
And, until yesterday, VFACTS new car sales data for May 2012 made no sense. How could sales be up 24.1 percent, compared to May 2011, in a stalled economy?
Such a result, with private sales showing the strongest growth in the period (with 30.3 percent growth across passenger car, SUV and light commercial sales), does not sit with what has become the accepted wisdom of a 'two-speed economy': a booming mining sector and everyone else on the bones of their backsides.
But the release of the national accounts may have provided something of an explanation. That is, middle Australia is bearing up despite the circling clouds of global uncertainty, and, importantly, prepared to spend on large purchases like new cars.
Certainly, and skewing the May VFACTS result, discounting is rife at the moment: the new car market is perhaps at its most competitive and cut-throat in decades. If you're thinking of buying, and you're prepared to haggle, there are extraordinary driveaway deals out there.
So, yes, right now, things are ok in new car dealerships. (Not travelling well, and an issue we'll look at in the next week, is a wholesale used-car market that has hit a wall.)
Myth: Large car sales are in decline
Amid the babble about the economy, and the fizz from a strong VFACTS result for May, sits an unchallenged 'accepted wisdom' about the car buying preferences of Australian consumers - both private and fleet.
It's a wisdom that is rusted on to nearly every commentary on the motor industry in this market - but should simply be regarded as myth.
There is a widely-held view that large car sales here are in decline.
But it is not true. And, in fact, spend a day driving anywhere and you know it - large car sales are as healthy as they have ever been.
It is a quirk of the way sales data is represented by the Federal Chamber of Automotive Industries (FCAI) in its VFACTS report, and of the increasingly blurred lines between vehicle categories, that gives birth to the myth.
Go back 20 years, and, in 1992, the first year of VFACTS reporting (it was previously done by the ABS), the sales breakdown of the passenger car market looked like the following.
|Segment||Percentage/Passenger car market 1992|
The remaining percentage (around 10 percent) consisted of Sport, Prestige and Luxury segments. Although not recognised then as a category, SUVs sales totalled 71,703 - 15.1 percent of the market - making a sum total passenger car market of 476,379.
The percentages shown are a little rubbery, but nevertheless provide a reasonable picture. (Accurate collation of the information is difficult because the segments, vehicle types and definitions, have been modified and changed a number of times over the period.)
A medium car then, in 1992, was any passenger sedan/hatch/wagon with a four cylinder engine 1901cc or larger.
Large cars were exclusively six and eight cylinder models, while small cars were classified by an engine size of 1401-1900cc.
Now let's look at the passenger market today based on May 2012 VFACTS results:
|Segment||Percentage/Passenger car market May 2012|
|Light (inc Micro):||11.6 (1992: 7.89%)|
|Small:||22.5 (1992: 21.48%)|
|Medium:||7.6 (1992: 18.51%)|
|Large:||5.7 (1992: 27.09%)|
(These percentages are expressed without adjustment for very small bus, vans, and heavy commercial sales, amounting to less than <4.9 percent of the total market)
What is an SUV if not an upright wagon? It is simply the modern iteration of the family car. Even twin cab utes are increasingly purchased as versatile family-cum-work vehicles, and increasingly designed for such dual-purpose roles.
Thus, if we were to spread SUV sales into 'vehicle size' categories, the percentages for May 2012 look like the table following.
(This paragraph added.) The brackets show 1992 sales across matching sectors with the 15.1 percent SUV sales (1992) apportioned across the small car segment (adding in a nominal 5.03% market share represented by small SUVs like the Vitara and Feroza popular then), the medium car segment (plus the likes of Jackaroo and SWB Pajero) and large car segment (plus the likes of Patrol and FJ80 Cruiser). It's a call - there may be some argument about this.
|Segment||Percentage/Passenger car market May 2012|
|Light (inc. Micro):||11.6 (1992: 7.89%)|
|Small (+ SUV small):||28.0 (1992: 21.48% + 5.03% = 26.51%)|
|Medium: (+ SUV medium):||17.1 (1992: 18.51% + 5.03% = 23.54%)|
|Large: (+ SUV large + total PU):||33.8 (1992: 27.09% + 5.03% = 32.12%)|
Pick-ups, 4X2 and 4X4 are included with large. The Navara, sharing a platform with the 'SUV large' Pathfinder, is thus classified 'large'; ditto grouping the HiLux and Prado, and Triton and Challenger, etc.
Sure, large sedans are not attracting much buyer interest. But the market in 2012 is not a market rushing to downsize into small car purchases.
That market in the table above for May 2012 looks as near as dang like the market in 1992.
- Tim O'Brien
The Motor Report Managing Editor
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