VFACTS May: Korean brands the ones to watch

Kia and Hyundai both recorded solid sales growth last month in the face of continuing stock shortages across the entire car industry, taking second and third place respectively behind Toyota and heralding an expected Korean brand surge over the next few years.

Toyota also put in a defiant sales performance during May, outselling its nearest competitor by 3:1 with 22,813 cars registered, but Kia’s rise to second for the first time – above Mazda (-38.7%) and Mitsubishi (-6.1%) – with a 2.6 per cent uptick (to 7307 units) last month now sets it up for a tilt at a top-three placing for the full year.

Supply is the big question for all car-makers, but Kia Australia’s chief operating officer Damien Meredith has told carsales that the company is expecting a record sales year of 72,000 units – up from 68,000 in 2021.

That could place it third overall behind a struggling Mazda, which has fallen 9.4 per cent to the end of May against Kia’s 3.1 per cent year-on-year growth, but hinges on whether Mitsubishi can stem its current run of monthly setbacks after strong growth in the first quarter.

Up 9.5 per cent last month, Hyundai will also have a say in the outcome – it won’t readily give up its accustomed dominant position over Kia, but is still down 4.4 per cent YTD.

Both Korean brands have designs on a permanent position among the top three by the end this decade, once they each get a ute into showrooms. Combined, they could eventually even outsell Toyota – the market leader for the past 19 years – with Kia and Hyundai standing at number two (combined) since 2009.

For now, however, Meredith says that won’t happen within the next five years and that Kia’s focus is on incremental annual growth.

“I think we’ll do 72,000 this year. It will be our first time over 70,000,” he told carsales.

“I think our aggregate [Hyundai and Kia] will be number two. Whether we [Kia] finish third, fourth, fifth or sixth is down to supply issues.

“That’s the problem for the industry, although we’re going pretty well.”

Meredith said he expects Hyundai to finish fourth, and perhaps better, provided both companies can get better stocks of popular models from their factories in South Korea.

“We’ve got some irate Carnival customers who have been waiting for more than six months,” he said. “[But] we are no worse and no better than any other company.

“It’s slightly getting better. It is improving a little. There may be world events working in our favour.

“The Lambda V6 engine is a big problem. It’s in Sorento, it’s in Carnival and in Stinger. It’s heavily demanded in North America and the Middle East. There is just a shortage of it that cannot cater for those big, big markets.

“[However] diesel is getting better. The appetite for diesel in Europe is not what it was.”

Asked to name the Kia models with the shortest wait times, Meredith could not be specific, but there are clear opportunities in the marketplace for buyers.

“The sweet spot? No lie, it chops and changes month by month. Unfortunately, the best bet is probably the bare-bones basic trim. But no-one wants that. People who are thinking Kia want to get the lot. Our mix is very rich at the moment.

“In Sorento, more than 60 per cent of people want to get a GT. It’s heathy, and good, but they are the ones that are most likely to be affected by delays.”

Kia’s consistent performance relies on a broad sweep of models, but at the top of the individual model table it’s Toyota that continues to dominate.

HiLux led the pack in May with 5178 sales, while three other Brand T cars fleshed out the top five: RAV4 (second, 2925), Corolla (fourth, 3310) and LandCruiser (fifth, 2667).

The punctuation mark was, as usual, the Ford Ranger (third, 3751), which is well down in sales this year due to the generational model changeover and has been delayed at the factory.

The Blue Oval’s overall sales were down 19.4 per cent last month, placing it sixth among the top 10 brands, while its current 19.8 per cent year-to-date deficit will deteriorate further before the new Ford Ranger and Everest stimulate a recovery.

Toyota’s 7.8 per cent sales growth in May – placing it 1.0 per cent ahead for the year to date – is also likely to be tempered from June onwards as it, too, battles stock shortages. The market leader was forced to order a stop-sale of popular HiLux models last month and faces more factory shutdowns in Japan this month.

But there’s no denying its resilience in a marketplace where other leading brands are suffering.

Beyond Mazda’s 9.4 per cent slump this year (-38.7% in May alone), Nissan sales have fallen 33.1 per cent, Subaru has dropped 21.4 per cent and Volkswagen is outside the top 10 with sales plummeting 38.0 per cent.

BMW outsold Mercedes-Benz last month to take prestige market honours, its 6.4 per cent sales decline not as deep as Mercedes’ 9.7 per cent, while for the year to date Mercedes-Benz holds sway. Yet both are well down in YTD terms (BMW -13.3%; Benz -17.7%).

Counterpoints? Isuzu Ute, still with only the D-MAX ute and MU-X large SUV in its stable, is entrenched in eighth position overall this year, its sales up 3.3 per cent to be well clear of Subaru, Nissan, Volkswagen, Honda and others.

Suzuki outsold Volkswagen last month (2219 versus 2216), its sales skyrocketing 38.9 per cent to be up 17.6 per cent YTD.

We’re also seeing continued growth from the Chinese brands, MG leading the way with 4064 sales in May (+15.9%) to place seventh overall and now 31.9 per cent ahead of its position at the same point last year.

Crucially, MG Australia says its supply lines are healthy moving into the second half. 

GWM/Haval and LDV were also up 25.7 and 8.1 per cent respectively last month – and both are currently enjoying double-digit YTD growth.

The industry recorded 94,383 sales in May, down 6.4 per cent on the corresponding month last year.

That now sees YTD sales 4.1 per cent in arrears of 2021 – currently at 437,884 units – and with no end to the continuing stock shortages in sight, the red ink will continue to flow.

All major vehicle categories were down last month – passenger car (-14.7%), SUV (-4.0%) and light commercial (-7.1%) – but, among the key segments, growth was found in medium and large SUVs. There were almost 230,000 SUVs sold across all classes, accounting for 52.4 per cent of all sales.

Electric cars continued their slow march forward with 925 sales on the ledger, not helped by a lack of Tesla Model 3 supply that kept Australia’s top-selling EV to 12 units.

In contrast, there were 695 plug-in hybrid (PHEV) sales in May, 7887 regular hybrids and 80,731 petrol/diesel vehicle sales.

FCAI chief executive Tony Weber said the outlook for the industry was not looking rosy as global supply chains struggle to recover from pandemic impacts.

“The global automotive industry continues to be plagued by a shortage of microprocessor units and shipping delays. This issue is not unique to Australia,” he said.

“Car-makers continue to report high demand across dealer showrooms and online marketplaces. [However] pandemic interruptions continue to impact manufacturing and conflict in Ukraine has disrupted vehicle component supply.

“Monthly sales figures are also dependent on shipping arrivals which continue to be uncertain.

“We do not expect supply chains to stabilise until these issues are resolved.”

Top 10 brands (2022 year to date):

Top 10 vehicles (May 2022):

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