A December survey of buyer intentions shows 2.125 million Australians said they intend to purchase a new vehicle in the next four years.

It is the lowest level since November 2014 and below the 15-year long-term average. This represents a decline of 135,000 or six per cent from 12 months ago in December 2017.

However, the one-year intentions are down by 61,000 (9.9 per cent) over the same period in 2017, now down to 553,000 people.

Roy Morgan industry communications director Norman Morris said there had been considerable growth in the new-vehicle market over the past years “but this is now facing a number of real challenges”.

“There is currently some concern about the slowing economy, lack of wage growth, energy price escalation, declining home values and political uncertainty with a potential change of government,” he said.

“In addition to these potential economic constraints on new-vehicle demand, the rapidly changing technologies with the resultant fuel choice decisions adds to the complexity of decision-making in this market.”

Mr Morris said there had been some early signs of changes in the industry, particularly in the very major move away from passenger cars to SUVs and the speed and range of new models entering the market.

“Most manufacturers are ramping up their development in areas such as electric vehicles and driverless cars but it will ultimately be the consumer that will determine who the winners are,” he said.

“This research has highlighted the need to understand the generational differences in likely fuel choice as the market changes.

“For example, the early adopters of changing motor vehicle fuels are most likely to be millennials as they appear to be more willing to move away from the traditional petrol-engine cars.”

Among intending new-vehicle buyers over the next four years, Roy Morgan’s research found an increasing level of interest in alternative fuels to petrol.

“The share of new-vehicle sales in Australia in 2018 (VFACTS) that had petrol engines was 75 per cent,” the firm said.

“This compares with only 61.9 per cent among intending buyers over the next four years, who think that their next vehicle would most likely have a petrol engine.”

Alternatives to petrol all showed higher preference levels among intenders compared to their share of current sales.

Diesel was 3.6 percentage points higher among intenders (27.6 per cent) compared to share of sales (24.0 per cent); petrol-electric hybrid was 7.1 percentage points higher (to eight per cent); fully electric was higher by two percentage points (to 2.1 per cent) and LPG 0.3 percentage points higher to 0.3 per cent.

Roy Morgan also found that millennials lead in preference for diesel and hybrid vehicles.

“Millennials have a 38.1 per cent preference for their next vehicle being diesel, against the market average of 27.6 per cent and well ahead of the closest generation, Gen X with 28.3 per cent,” the company said.

“They have an above-average preference for hybrid with 12.6 per cent compared to a market average of eight per cent.

“The likelihood of their next vehicle having a petrol engine is only 48.2 per cent, well below the average of 61.9 per cent.

“The oldest generation, the pre-boomers, retain the highest level of preference for petrol engines with 78.4 per cent and a well below average likelihood of purchasing a diesel-powered vehicle.”

By Neil Dowling