New car sales in Australia slump but luxury brands buck trend during coronavirus pandemic
New car sales in Australia have slumped since the start of the coronavirus pandemic, but one sector is bucking the trend – luxury brands.
Overall sales have fallen 20% as people have lost jobs and income, overseas factories have closed down and the recession has begun to bite.
But sales of luxury brands have declined much less sharply and, in at least one case – Audi – actually increased.
Figures from the Australian Automotive Dealers Association and Commonwealth Bank show car sales were down 20% between January and August, and down 29% compared with the same time last year.
But luxury car sales were down only 2.8% by August.
The chief economist at CommSec, Craig James, said this was likely to be due to wealthier Australians having more disposable income during the pandemic, with overseas trips, nights out and other forms of discretionary spending severely restricted.
“New luxury vehicle sales are probably holding up better than the overall market because people are substituting the money they would have spent on overseas travel on upgrading their vehicle purchase instead,” he told Guardian Australia.
“With interest rates low and no spending possible on overseas travel, people are more likely to upgrade purchases on cars, domestic travel and other little luxuries or discretionary purchases.”
A spokesman for Audi Australia, Shaun Cleary, said sales had increased by 1.4% over the year. The company sold 9,552 cars between January and August.
“In the context of the challenges presented by the coronavirus pandemic – and a total new vehicle market that is down 20.4% for the same period – we feel it is a very strong result,” he said.
“The coronavirus pandemic has severely affected many people in terms of their health and wellbeing, and also their way of life if their employment has been impacted.
“But for those customers who have been relatively unaffected, we have certainly seen that there is continued strong interest in the luxury vehicle market, given the shift towards own vehicles being the preferred method of mobility, as opposed to public transport [or] flights.”
Sales of secondhand Audis had also risen, Cleary said.
A spokesman for Porsche said sales had fallen 13% this year, with 2,631 cars sold from January to August, compared with 3,007 over the same period last year.
However, he said the decline was due more to supply chain issues and the company was still experiencing “good demand”.
“Our Q3 sales numbers are largely a result of supply constraints that are the flow-on effect of factory closures in Germany earlier this year. Another factor is significantly restricted operations in Porsche centres located in Melbourne.”
James Voortman, the chief executive of the Australian Automotive Dealers Association, said it had been a tough time for car sales.
“The industry is down for 29 months in a row,” he said. “Sales were falling even before Covid.
“Luxury sales had a pretty strong June month, and they weren’t too bad in May. They are still down, a brand like Mercedes is down 10% for the year but that is better than most brands.”
Voortman said supply chains for new cars had been disrupted by the pandemic, with factory closures and importing difficulties, but these were now starting to ease.
“Importing has been affected because, due to closures, factories aren’t
making the number of cars they were making under normal circumstances. Australia competes with a number of other markets to get hold of supply. We are one of many markets experiencing delays.
“It’s not uncommon for consumers to go into the dealership and be told they have to wait a certain amount of time before they can get the car. But as I understand it now, import and export supply chains are running smoother. They will improve their delivery timeframes over the next months.”
Data from Moody’s shows used car prices have risen, with prices in July up on the previous year and 30% up since April.
Voortman said the slow sales of new cars had the knock-on effect of restricting the number of used cars entering the market as fewer are traded in.
Demand for used cars was also higher, as people avoided public transport and domestic flights were heavily restricted.
“As this pandemic has rolled on people have been quite nervous to take public transport, and there has been an element of the public looking at used cars to maybe get a second car,” Voortman said.
“There is tight supply in the used cars, there is also tight supply in the new cars because we had factory closures in many parts … New car supply is getting better, gradually. Supply of used cars has not gotten better in the last few months.”