THE Australian automotive market, in spite of sales running nearly three percent short of sales year-to-date compared with last year, appears to be on track to shift 1.1 million vehicles this year, according to Pitcher Partners in its latest quarterly (March 2025) VFACTS analysis.The motoring industry services team at Pitcher Partners notes that sales in March saw an increase in March 2025 with 111,617 new vehicles sold in the month, representing a 1.7 per cent rise compared to March 2024. 

The report said that “this sets the market on track for 1.1 million vehicles, in line with our first forecast in December”.

“While March is a positive sign, this monthly increase was not sufficient “to bridge the gap” as year-to-date (YTD) sales of 295,952 vehicles reflected a decline of 2.8 per cent from the first quarter last year,” the report said. 

“Overall, Pitcher Partners is positive on the market despite economic pressures, as expected interest rate cuts are realised and cost of living pressures ease in the second half of CY25.”

Key highlights of the Pitcher Partner analysis include:

• Inventory levels, interest rates, diminishing demand and inflation have all made Q1 2025 a tough quarter for dealers.
• There are few manufacturers or franchises that are not experiencing the impact of a supply push market. We are seeing the return to pre-pandemic levels of discounting, incentives and subvented finance.
• Order banks are keeping declines smaller as business buyers lead the way.
• Q1 was a mixed bag for Japanese manufacturers in what is usually a strong quarter across the board.
• Battery electric vehicles continue to slide and will do so until the price point garners enough interest from the volume consumer.
• Will PHEVs continue to have strong demand as the FBT exemption ceased on April 1?
• Dealer performance is under pressure, with compressed margins and a need for effective cost management strategies implemented in earnest.
• Private demand down in Q1 but up marginally in March.
• How many more Ute models can the crowded market handle?
• Business buyers remain the strongest segment, up 2.8 per cent YTD, and are the only group showing growth, now accounting for nearly 40 per cent of all new vehicle sales.
• Government and rental sales declined sharply, down 11.9 per cent and 15.8 per cent YTD respectively.
• Private buyers are showing positive signs in March on the back of a February interest rate cut, up for the corresponding month. However, the sluggish start to the year has units down 4.6 per cent YTD.

Order banks are helping the year 

Two new models lead the way: the BYD Shark and the new Toyota Prado.

The highly anticipated BYD Shark 6 plug-in hybrid Ute has started deliveries in Australia. The Shark recorded 2,810 units in March (making it the 6th highest model sold), bringing its quarterly total to 4,836 units.

With a competitive entry price and strong early reviews, the backlog of orders is expected to sustain demand in the short term, although volumes may normalise later during the year.

Meanwhile, the new Toyota Prado which attracted significant pre-orders last year, in March, 2,871 units were sold, representing a 543 per cent increase on the same month last year when the previous-generation model was still on sale. 

YTD, Prado sales reached 8,441 units, up 163 per cent on the prior quarter’s 3,210. 

Weaker private buyer activity and solid business demand Private buyer activity remained subdued in YTD March 2025, however was up month-on-month March which are encouraging signs and most likely off the back of the interest rate cut. 

Business activity remained strong and continued to support overall market demand. Businesses contributed positively, with SUVs and light commercial vehicles being the most popular categories in these channels.Business buyers now represent close to 40 per cent of all new vehicle sales. This highlights the continued demand from the private sector, particularly when compared to private buyers who are more impacted by short term affordability concerns. March saw an increase for private buyers from 2024 potentially the effect of consumer confidence and the February interest rate cut.

A positive note is that the RBA is expected to continue to reduce the cash rate over the rest of the year, which will flow through to consumer behaviour. The impact may become more apparent in the back half of the year, depending on how households interpret these cuts.

Electric vehicle uptake has slowed, while PHEVs thrive. Hybrid vehicles (HEV) and plug-in hybrid vehicles (PHEV) continued their upward trajectory, indicating that consumers are still favouring transitional powertrains over battery electric options.

The end of the Fringe Benefits Tax (FBT) exemption for plug-in hybrid electric vehicles on 31 March 2025 played a key role in shaping March figures. 

From 1 April 2025, PHEVs are no longer classified as zero or low-emissions vehicles under FBT legislation, meaning they are no longer eligible for the electric car’s FBT exemption. 

As a result, we expect March’s result was impacted by a last-minute surge in PHEV registrations and this highlighted a broader trend of softening BEV demand. BEV sales are now down 29.9 per cent YTD, driven primarily by Tesla’s 60 per cent decline. We look forward to next quarter’s result to see what impact, if any, the government’s tax policy has on uptake.

Underperformance of Japanese brands

Despite the timing advantage of their March fiscal year-end, most Japanese OEMs failed to convert this into sales momentum. Toyota was the exception, increasing March volumes by 8.3 per cent and up 2.8 per cent YTD. 

However, all other Japanese OEMs, particularly Nissan, Subaru, Isuzu Ute, and Suzuki, recorded double-digit monthly declines. Collectively, the top Japanese brands fell 4.8 per cent YTD.