Management Workshop, News

THE electric vehicle strategies of Australia’s three listed dealer groups are well developed, according to a report by the Motor Industry Services unit of Pitcher Partners, with Eagers Automotive already capturing 10 per cent of the national EV market.

The report said: “Already, we see the listed dealership groups have emphasised a focus on EV’s as a key strategy to capitalise revenue in this growing market”. 

The predictions were contained in Pitcher Partners’ third edition of the annual Australian Listed Dealer Comparison report, just released.  

By studying the detailed key financials reported by the three big listed dealer groups across hundreds of dealerships selling all brands, the report opens up a unique window on the health of the auto retail trade as a whole.   The report said that Peter Warren Group has increased its New Energy Vehicle (NEV) line up to 71 models across all customer discretionary spending budgets. 

“This is complemented by the breadth of auxiliary services from point-of-sale products and investment in charging infrastructure to fully trained technicians and repair services.

“Eagers Automotive has increased its ownership stake in the BYD retail joint venture with EVDirect.com. EVDirect.com is the exclusive holder of distribution rights for BYD in Australia. 

“Additionally, Eagers purchased a stake in McMillian Shakespeare and entered an agreement to help tap into the novated leasing market and has flagged a strong interest and investment into the electrification of the last mile delivery segment. 

“This has assisted Eagers to capture more than 10 per cent of the NEV market by deliveries.”

Pitcher Partners said that Autosport’s Group, which has a luxury focus, “anticipates growth in the EV sector as luxury car manufacturers offer a structural advantage over volume brands.

“EV uptake in the luxury space is driven by luxury consumers remaining brand loyal but also, importantly, financially capable of changing to EV products. 

“Established luxury brands are already well on the electrification journey with 36 per cent of all deliveries EV’s in 2023.”

Referring to EV sales in general, the report said: “We expect the uptake of EVs to follow the global trajectory in Australia and will grow further to stabilise around 15-20 per cent of the total Australian market in 2024 and 2025”.

“New electric vehicle offerings remain one of the key strategic priorities dealerships are focusing on, each wanting to capitalise on the growth of this market while maintaining profitability in the turbulent transition period.

“Demand for EVs, which have taken the world by storm, is now starting to stabilise globally after the early adopters have taken delivery. 

“We have already seen a shift in the Australian sales trends with 8.1 per cent (including PHEV) of total car sales in 2023 consisting of electric vehicles, compared to 3.1 per cent for 2022 of total car sales. The ACT is seeing EV share of 21.9 per cent.”

“But what is driving this demand?

“EV’s are still more expensive than their ICE counterparts to initially purchase, insure and repair, however the price gap between ICE and EV’s is tightening. The cost associated with batteries has been on a downward trend since 2010 mostly due to economies of scale and technology improvements, making EV’s cheaper for manufacturers to produce. Servicing (scheduled) and fuel costs remain the obvious benefits to EV’s over the traditional ICE powertrain.

“EV’s market share has grown 161 per cent from 2022 to 2023 (3.1 per cent to 8.1 per cent). Australia’s unique market preferences for larger and more expensive SUV’s, high proportions of vehicle ownership and a stable economy; there is an opportunity for dealerships to capitalise on the growing market if viable EV or PHEV products are made available to suit the market preferences,” the report said.

Referring to the New Vehicle Efficiency Standard (NVES), the report said that for dealerships the NVES was an opportunity to review the elements of operations over which they have a greater control: used vehicles, F&I and customer retention.

“Dealers need to refocus their businesses to find the opportunities to offset any downside from new EV sales, scheduled services, or parts throughput declines. Despite the move to electrification, there is a long tail when it comes to the existing car parc in Australia, which is majority ICE and will require continued servicing and parts.

“Pitcher Partners welcomes the NVES as a much-needed government policy. It is very late to the game and both sides of government (past and current) can be attributed blame.

We also welcomed the government decision to listen to the logical arguments of the industry and make changes to the original proposition, creating a more sensible outcome for dealers. 

“The targets remain difficult to achieve, especially if the fit for purpose products do not eventuate or are not customers’ preferences. The importance of the 2026 review cannot be understated.”

By John Mellor

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