New car sales to cool, says Hyundai

Despite notching up a million sales already this year, Australia’s new-vehicle market is now starting to show signs of cooling as inflationary COVID-19 demand now begins to settle down, according to Hyundai Motor Company Australia chief operating officer, John Kett.

Speaking at the launch of the new Hyundai Kona Hybrid and Electric, Kett said some auto brands were now even using discounts to clear stock.

“The supply side of the business has definitely changed for many of our competitors, so we’re starting to see incentives in the marketplace,” he said.

In contrast, vehicle supplies remain tight for the local arm of the Korean car-maker and Kett said Hyundai Australia is “very conscious of the challenging times we’ve got economically”, despite strong demand for models including the award-winning new Kona.

“We’re getting incredible orders on Kona and certainly Kona Hybrid is starting to become a significant part of our business. We’ve had a very strong October and we’re looking forward to a very strong November.”

However, the shift in the market’s mood was certainly being felt by Hyundai, said Kett.

“Our cancellation rates have hit double figures. Typically, when talking about cancellation rates, some are a function – at least historically – of people having their names down against three to four cars across the business, waiting for the supply chain to address itself, so we’ve lost a few of those. About 40 per cent of cancellation rates are these.”

The rise in interest rates and inflation has also had its effect on people’s ability to borrow money for a new car, said Kett.

“We’re certainly losing some cancellations related to credit. This is in terms of credit applications being rejected in serviceability being a bit more challenging at this time, but that’s just a part of business.”

Kona sales are down 13.8 per cent or 1418 units so far this year (8856 to the end of October), but that’s because Hyundai ran low on supply. Since the new Kona was launched in June, the company has posted double-digit sales growth for the new model.

Overall, Hyundai has sold 63,578 vehicles to the end of October – up just 183 cars or 0.3 per cent over the same period last year. The weak growth can be attributed mainly to the loss in Kona sales (almost 2000 units), as well as slower sales of the Venue light SUV (almost 1000 units down) and the i30 small car, which has notched up 646 fewer sales this year.

The loss of volume over last year has almost exclusively been made up for by the Tucson mid-size, with a 3442-unit sales increase this year.

However, month-on-month sales results for Hyundai appear strong, with a 25.2 per cent increase in October 2022, with 6620 vehicles sold.

Kett said plenty of buyers still have money to spend on new cars, noting that “We’re still getting orders for higher trim models”.

But he stressed that the glory days were over for a pandemic period in which people queued up for new cars for several years.

“Now, you’ve got to work for it,” he said.

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