Aussie car market 'flattened' over 15 years

The new car market in 2012 set a new record, but that offered little solace for at least one local manufacturer.

Ford's announcement that it would curtail engine and vehicle production in Australia from 2016 seems to fly in the face of all that's logical, when the market is selling more cars than ever. But the consistently growing market (stifled occasionally by a global financial crisis and the odd natural disaster in Asia) has been broadening as well as rising. The effect is like watching market forces stomp down on a witch's hat made from foam rubber.

Small cars are often cited as the root cause of the large car's sales decline. Where once the volume-selling large car was the product most likely to deliver the right level of equipment and dynamic ability for an affordable price, many small cars are as driveable as the large cars and easier to operate, but also boasting acceptable roominess, (usually) better specification and generally lower running costs.

The trend towards small cars is not unique to Australia. As long ago as 2008, at the international launch of the current generation Ford Fiesta, Australian journalists were told that small cars would take an ever larger share of the cake; with Ford analysts tipping that 30 per cent of new car sales would be small cars in the not too distant future. In Australia, however, it's not simply small cars proving easier to sell in the post-GFC period. We're in love with our SUVs too – something that Ford Australia turned to its advantage when it launched the Territory here in 2004 – and there's no sign of that love affair receding. SUVs, perhaps more than any other VFACTS class, have hurt sales of the traditional large, six-cylinder family car. They're very practical and offer greater flexibility than Falcon, Commodore and Camry derivatives that have been built in Australia for decades.

And then, beyond those buying the cross-over SUVs that represent the fix for family car buyers who don't want the sort of three-box sedan their parents used to own, there's a harder-edged demographic – buyers who want something like an SUV, but with a bit more towing capacity, off-road competence and robust construction. For this kind of buyer the dual-cab 4x4 pick-up is a Godsend. Modern vehicles of this type (ironically, Ford's locally designed Ranger is a great example), can be exceptionally refined and capable... in ways they weren't just five or 10 years ago.

That's how and why private buyers have moved away from the traditional large car – although anecdotal evidence suggests private buyers have been more loyal to Falcon and Commodore than fleets have. In the past, unions insisted that (government) fleets provide safer large cars built locally, rather than one-tonne pick-ups and vans, but time has moved on and fleets are more likely to choose vehicles on the basis of factors other than occupational health and safety alone. They will look at resale value, operating expenses, and the ability of the vehicle to fill the owner's needs in a specific role. Gone are the days of pummelling across paddocks in an XF Falcon wagon simply because the workers won't accept a cramped buzz-box of a commercial vehicle. That battle was lost once the companies supplying one-tonners lifted their game and provided plenty of performance and creature comforts.

It's the same with sales of cars through novated leasing – a practice that allows the employer to negotiate a 'company car' deal with the employee, without facing the cost and depreciation of an asset on the company books. Novated leases are treated by VFACTS as business sales, but in all but a technical sense, novated leases apply to cars sold to private buyers. They're using company funds (their employer's) to buy a company car that's registered in their own name and they get to keep at the expiration of the lease. The rise of the novated lease as a bargaining tool between employer and employee has shifted market share from cars that companies bought in the thousands to a rag-tag 'fleet' of cars that could range from a tiny little SUV that's never likely to go further afield than down the street for a latte, to a two-seat sports car for the high-flying executive who has no kids. Before the novated lease era, the employee might have choice no wider than a Mitsubishi Sigma rather than that SUV, or a Holden Calais rather than the sports car.

The video you see here shows a selection of vehicles and their respective sales over a 15-year period from 1997 through to the end of 2012. Only two cars are constants – the Falcon sedan and wagon in blue, and the Holden Commodore sedan and wagon in red. These two cars do not include sales of long-wheel base luxury sedans or car-derived commercials (the utes and Falcon van, which was still available until 1999). The other cars are, variously, the three most popular models in the light, small and medium passenger car segments, the compact and medium SUV segments, and one-tonne pick-ups and cab chassis models. For 2012, when VFACTS segmentation changed by splitting compact SUVs into two distinct segments – small and medium – we continued to treat vehicles in both segments as 'compact SUVs' for the sake of simplicity. Likewise, the large SUVs in 2012 were formerly medium SUVs and remained accounted as medium SUVs for the sake of the presentation.

Information supplied courtesy of VFACTS.