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AUSTRALIA is heading for a record new-car sales year with the latest estimates of up to 1.3 million units driven by consumer demand but mainly by a record population growth.

Research by Pitcher Partners and published in its first quarter 2024 March VFACTS analysis and deliveries prediction show the population has grown by an average 400,000 annually for the past decade excluding 2021 which was impacted by COVID lockdowns and inbound travel restrictions.

Writing in the report, Pitcher Partners’ Motor Industry Service lead Steve Bragg said the population actually grew by a record 583,000 people in CY23 “meaning 26,000 more new vehicles were sold by virtue of population growth alone.”

“Calendar year 2023 finished on a record sales volume of 1,216,780 units,” he said.

“That means 4.58 per cent of the Australian population bought a new car in CY2023. Said in a different way, 45.8 out of 1000 people bought a new car last calendar year. 

“This compares with the average from 1995 to 2023 of 4.46 per cent of the population or 44.6 per 1000 people.”

Mr Bragg said now is the time to buy a new car, given that the stock levels are back to the pre-COVID period for most brands.

“If a consumer is in the market to buy a new car, there is little wait time and competition is back,” he told GoAutoNews Premium.

“With the increased new car inventory, we are seeing discounting from OEMs creep back into the norm. 

“MG have discounts from $1000-$6000 on their entire model line-up.”

For dealers, the news is good but Pitcher Partners tempered this by saying that increased stock, discounts, and sales volumes leads to margin compression. 

“This means dealers need to focus on cost control measures to maintain profits,” it said.

While Mr Bragg and his colleagues at Pitcher Partners recognise the population growth as a key driver to new car sales, he said that a significant contribution in sales growth in CY23 “is the delivery of vehicles not sold in the 2019-2022 period as the supply chain improved.”

Steve Bragg

“We haven’t really touched on the replacement of cars not sold in the 2019-2022 period,” he said.

The reason for the disparity in sales figures is attributed to used cars. Mr Bragg said people have bought used cars instead of new cars and much of this comes back to the population movement.

“New arrivals migrating to Australia would likely lean towards used cars, especially in 2023 as new cars are on average 30-50 per cent more expensive than in 2019,” he said.

“In addition, the average interest rate on car loans is now 10 per cent plus.”

Pitcher Partners said that the used-car market was currently 2.5 to 3.0 times the size of the new-vehicle market, giving it a volume in 2024 of up to 3.9 million units.

“Used cars will be key as the migrant-driven population growth takes hold,” Mr Bragg said.

“Newly-minted Australians will look for value when buying their first vehicle in Australia. That’s a boon for cheap new cars with long factory warranties.

“On the flip side, late-model used cars from established premium and luxury brands with a warranty will also fare well for those that want a mainstream brand and confidence in their purchase.”

By Neil Dowling

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