THE year ahead will bring a broader range of more affordable new cars, rising EV sales, the potential for a 10 per cent EV market share, plus the chance of lower interest rates, says a forecast by Cox Automotive Australia for 2025.
In its 2025 Market Outlook report just released, Cox Automotive Australia said new-car buyers will face the lure of more affordable new cars as car-makers offer incentives and discounting to balance supply and demand.
Cox Automotive Australia CEO Stephen Lester said that as cost-of-living pressures continue to impact the private market, and with supply no longer an overarching problem, he would expect an even harder-fought sector in 2025, with keener pricing and finance options a likely result for private and fleet buyers.
“Big picture issues to watch include the federal election in April or May, the introduction of the New Vehicle Efficiency Standard (NVES), the end of fringe benefits tax concessions for PHEVs, predicted cash rate cuts from the reserve bank and the ongoing increase in volume from Chinese domestic brands, which captured 12 per cent market share last year,” he said.
“We’re predicting a slight decline in volume this year, and more margin pressure for retailers.”
Cox’s report said that as car-makers see a growing inventory of new vehicles from the factories, and with more intense market competition particularly from China, deals to move metal will be a strong point through the year.
Demand for new cars will continue, it says, based on demand as fleets and private owners upgrade and also as the population expands. Australia welcomed more than 550,000 additions to its population in 2024 and much of that will generate car sales.
“It means 2025 will continue to offer up a ‘buyer’s market’, unlike the supply-constrained ‘seller’s market’ we saw during 2021-2023,” the report said.
“Forecast new vehicle sales for this year are around 1.18 million units, down 4.6 per cent over 2024’s all-time record tally of 1,237,288 vehicles, which was driven by the first half of last year.
“In all likelihood, both private and fleet sales will face headwinds and cool year-on-year in the first half of 2025 in particular, driving the introduction of more incentives at OEM and dealer level to ‘move metal’ – manifesting as discounts or lower finance interest rates.”
Cox said that one key indicator of its 2025 forecast was to monitor how the calendar year 2024 finished, and how that is expected to spill over into this year.
“2024 was a year of two halves, with very strong growth in the first half (H1) of 8.8 per cent but slowing sales in the second half (H2), down 4.9 per cent,” it said.
“Sales generally softened after June 2024 due to myriad factors, arguably the top one being a sluggish private market driven by reduced household discretionary spending amidst well-publicised cost-of-living pressures, low wage growth, and reduced COVID-era legacy savings.”
In the second half of 2024, private vehicle sales fell by a substantial 8.0 per cent and CAA expects the structural factors driving this to linger into the first half of 2025 at least.
“At the same time, while business and government fleet sales were strong early in 2024 in part because of better vehicle supply, allowing these large-scale buyers to turn over fleets they were forced to retain amidst the COVID-era shortages, they too cooled by 1.3 per cent in the second half,” it said.“Other factors that could impact non-private sales in 2025 include a predicted slowdown in the private investment pipeline (according to the 2025 Commonwealth Bank Economic Insights report), and the predicted short-term impact in the lead up to the federal election, slated for April or May.”
Cox said that two further big-picture factors are expected to significantly impact the market in 2025.
These are the predicted increase in electric vehicle (EV) sales after a sluggish 2024 (sales were up 4.7 per cent), and a further dramatic expansion of offerings from Chinese domestic manufacturers.
“Cox expects pure EV market share to increase from 7.7 per cent across 2024 (91,292 sales, excluding heavy commercial vehicles) to around 10 per cent of the market (around 115,000 sales), with BYD Australia set to be a significant factor alongside incumbent leader Tesla with its updated Model Y,” it said.
“Meanwhile electrified vehicles – EVs, plug-in hybrids (PHEVs) and hybrids – are expected to take close to one-third of the market combined, up from 24 per cent share across 2024. “While hybrid leader Toyota is forecasting slightly lower sales, there are increasing numbers of competitors poised.”
Cox said that the impact of the end of fringe-benefits tax concessions for leased PHEVs – which has been a huge factor in their steep recent sales growth – will affect growth of electrified vehicle sales.
“However, the rollout of PHEV utes such as the BYD Shark and Ford Ranger should grow the market despite the headwinds,” it said.
“Australians are also going to buy more and more cars from China’s domestic manufacturers, with this market a low-barrier and lucrative destination in an era of increasing protectionism in the US and Europe. They undercut their competitors and are improving rapidly.”The report said that Chinese brands – namely MG, GWM, BYD, LDV and Chery – combined for about 142,000 Australian sales in 2024, equal to 12 per cent market share.
“This year Cox expects share from Chinese marques to grow appreciably and potentially nudge 20 per cent, or one-in-five sales,” it said.
“This year will see all those existing volume brands expand their line-ups significantly with promised new models, while a spate of new OEMs such as Geely and Leapmotor will arrive, with experienced management, factory backing, and engaged franchise dealer networks.”
Chinese model launches will include the BYD Shark and Sealion 7 EV; Chery Tiggo 9 and Jaecoo J7 SUVs; LDV eTerron 9 electric ute; MG ES5 EV and HS hybrids; GWM Haval H7; Geely EX5; and Leapmotor C10, plus CAA expects growth from newcomers such as Zeekr, Deepal and JAC.
By the end of 2025, Cox said there will be about 15 Chinese brand names in the market, covering all segments and fuel types, with price bands from $25,000 and into six-figures.
By Neil Dowling