Figures released by the Federal Chamber of Automotive Industries (FCAI) show that the Australian new-vehicle market in August recorded its 17th successive month of declining sales, down 10.1 per cent on the corresponding month last year and placing the industry 8.0 per cent in arrears for the year to date.
In a media briefing held in Melbourne, FCAI chief executive Tony Weber pointed to a broad range of factors that he said were contributing to the industry’s decline – extended drought and floods, federal and state elections, luxury-car taxation, overseas events such as the US-China trade war and Brexit, and a general lack of consumer confidence.
But he also emphasised that “financial markets have tightened, lending is more difficult to access”, which are feeding directly into the automotive industry’s current difficulties.
“Is the tightening of access to finance truly warranted in this country? Are the regulators overregulating the economy? Is the finance sector being too cautious following the banking royal commission?” Mr Weber asked.
“This goes beyond automotive, but it certainly affects us.
“Is this putting an anchor on our economy?
“These are all important questions that need to be addressed.”
Mr Weber said that it was not just the FCAI asking questions such as these, as “there are other sectors in the economy that are also questioning whether the response to the royal commission from both the regulators and the financial sector is appropriate”.
“It is a really important question because as a nation, you don’t want to go into recession, or you don’t want to put the economy in a position that it doesn’t need to be,” he said.
Mr Weber acknowledged that “it is a tough market, we all recognise that”, and conceded that the current trading environment was the most difficult the industry has faced for several years.
“My word, there’s no denying that. And in tougher times people make decisions about their businesses – whether it’s the corner shop or whatever it is – in the economic environment in which they operate,” he said.
These difficult conditions – both locally and further afield – have seen Infiniti announce this month that it is pulling out of the Australian market by the end of next year, and Mr Weber said brands would continue to come and go.
“We live in a market-based economy and what you learn in first-year economics is that a successful market-based economy means that brands will enter and leave the market,” he said.
“That’s what happens here and the benefit of that, whilst difficult for brands, whilst difficult for dealerships, difficult for the industry, it’s great for consumers because that’s what drives competition and that’s what drives enhancements in terms of safety, enhancements in terms of environmental outcomes, and reduced prices.
“And that’s exactly what is happening.”
Mr Weber said the industry’s downturn had at least provided excellent opportunities for consumers in the highly competitive marketplace.
“The fundamental underpinnings of the market are still good,” he said. “Interest rates are low, unemployment rates are low.
“The product out there – there is extensive product, there’s almost 400 models in the marketplace, there’s enormous competition, prices have never been cheaper.
“The scenario for consumers is very good and I’d have to say, if I was a consumer, this is the time to go out and buy because you’ll never get a better deal.”
Asked whether he thought the industry was now in a long-term decline, fuelled by new mobility services that will pick up momentum and shrink the size of the overall market, Mr Weber said: “I don’t subscribe to those theories (about new mobility services).
“The cities are becoming bigger and passenger vehicles are being utilised more and more by people as they live further away from the CBDs. I don’t see that at all. I am not concerned about that. I think that passenger vehicles will play an important role for a long time.”
By Terry Martin
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