AAAA Dashboard - Q2 2019 by aaaa710

AAAA Dashboard Q2 2019

The voice of the independent aftermarket in Australia Welcome to the Q2 2019 Edition of the Aftermarket Dashboard, a quarterly information service for members of the AAAA. This industry publication captures useful statistical and related data, as indicators of the unfolding trends and health of the automotive aftermarket industry, and has been designed to provide regular insight on our industry. We value your suggestions for improvement or feedback regarding content. Data sourced from VFACTS New Car Sales Data, ABS Motor Vehicle Census, ACA Research Consumer Automotive Survey

1. Current State of the Market

2. EV Outlook

3. Servicing Behaviours

Australian Automotive Aftermarket Association Dashboard. Presented by ACA Research. Copyright ÂŠ 2019.

4. Industry Headlines

1. Current State of the Market

Australian Automotive Aftermarket Association Dashboard. Presented by ACA Research. Copyright ÂŠ 2019.

Australian Economic Indicators Consumer Confidence

100.9

(é0.2)

Westpac Melbourne Institute (Q2 ’19, vs. Q1 ‘19)

Business Confidence

110.7

(é4.6)

Roy Morgan (Q2 ’19, vs. Q1 ‘19)

Consumer confidence has held its position throughout 2019 so far, however remains lower than the same period in 2018.

Business confidence regained lost ground in Q2, breaking the downward trend we’d seen over the last two quarters.

This suggests deepening concerns about the economy have outweighed the initial boost from lower rates, although we may see further increases off the back of the federal election in May.

This is despite a significant level of negativity in the media about Australian economic conditions, and suggests that businesses are maintaining a more positive outlook for the year ahead.

Fuel Prices

$1.46

(é16c)

AiP - Ave weekly price (Q2 ’19, vs. Q1 ‘19)

Despite a decline seen in Q1, Australian fuel prices have soared in Q2, rising an average of 16c per litre. The increase is in line with cyclical movements at retail outlets, especially in major cities. Global factors have also contributed to the sharp uplift in prices, such as crude prices and exchange rates.

New Car Sales By Quarter Reflective of lower levels of consumer confidence compared to previous years, car sales are substantially lower than the same period in 2018. With that said, the uplift vs. Q1 shows that EOFY sales activities are still having an effect, albeit to a much lesser degree than usual.

285,928

340,000

2019 sales volume in Q2

YoY change

-9%

320,000 300,000 280,000 260,000 Q1

2017

2018

Australian Automotive Aftermarket Association Dashboard. Presented by ACA Research. Copyright ÂŠ 2019.

2019

New Car Sales By State While the overall market trended down, sales in Tasmania remained strong as the only market to outperform 2018. At the other end, NSW was one of the hardest to be hit, with weakening consumer confidence driving sales down substantially against the comparable period in 2018. Q2 Volume

% Chng (YoY)

Q2 Share

New South Wales

91,601

-10%

32%

Victoria

81,291

-8%

28%

Queensland

59,901

-9%

21%

Western Australia

23,805

-7%

South Australia

17,581

-7%

Tasmania

5,001

Australian Capital Territory

4,247

-10%

Northern Territory

2,501

-26%

285,928

-9%

State

TOTAL

Australian Automotive Aftermarket Association Dashboard. Presented by ACA Research. Copyright ÂŠ 2019.

New Car Sales By Marque Q2 Rank

1 2 3 4 5 6

é1

7é1 8ê2 9 10

Make

Q2 Volume

Toyota Mazda Hyundai Mitsubishi Ford Kia Volkswagen Holden Honda Nissan TOTAL

% Chng YoY

Q2 Share

55,155

-7%

19%

27,028

-9%

24,576

-7%

18,728

-17%

17,746

-2%

17,254

13,818

-12%

12,692

-26%

12,559

-11%

12,509

-10%

285,928

-9%

vehicles 4,398 Fewer sold year on year Despite selling over 55,000 vehicles in Q2 2019, Toyota also underperformed year on year, falling 7% short of its 2018 results and 9% short of 2017. It is however still the clear market leader, more than doubling the sales of Mazda as its closest competitor in the top 10, and selling almost one in five of the total vehicles sold in the quarter. Towards the bottom of the top 10, Holden’s sales continue to fall, with the brand down to 8th place in the latest quarter, and just 183 units ahead of Nissan in 10th. On a more positive note, Kia continues to defy the negative trend, creeping up into 7th place with a 1% growth in sales vs. the same period last year. 7

2. EV Trends

Australian Automotive Aftermarket Association Dashboard. Presented by ACA Research. Copyright ÂŠ 2019.

Electric Vehicle Growth Evolution of Australian Electric Vehicles

% auto execs rating trend as extremely important

7,916 2,976

2013

2018

59%

Connectivity and digitalization

56%

Battery electric vehicles

56%

Fuel cell electric vehicles (FCEVs)

52%

Hybrid electric vehicles (HEVs)

Despite Australiaâ&#x20AC;&#x2122;s continued love affair with diesel utes and SUVs, and electric vehicle adoption facing a range of barriers, there is no denying that it is a category that will continue to grow. In the short term however, challenges around the lack of federal government support, and limited infrastructure availability mean that EV adoption rates are lagging compared to other developed countries. This will change with global automotive executives viewing connectivity, digitalisation and electric vehicles as the key industry trends for the next 10 years, but from a workshop perspective, we will see a range of alternative powertrain technologies (petrol, diesel, EV, and PHEV) co-existing for a very long time to come. Australian Automotive Aftermarket Association Dashboard. Presented by ACA Research. Copyright ÂŠ 2019.

Generational Interest ACAâ&#x20AC;&#x2122;s latest research on consumer attitudes to EVs suggests around a quarter of Australians would be interested in purchasing an EV as their next vehicle. While this is likely to continue to grow, it will take time for intentions to follow through to purchasing. Moreover, the demographic segment most interested in purchasing EVs is the youngest group, with many of this cohort not at this time having the purchasing power to afford the EVs available in market. Looking at pricing in more detail, research suggests that the consumer sweet spot is $20,000 to $35,000, bringing desired pricing in line with alternatives in the small / medium SUV or small passenger vehicle market. With Australia currently offering few subsidies, consumers are likely to look to finance EV purchases, potentially impacting their servicing options and/or requirements.

Interest in buying an EV as next vehicle by generation Gen Z 39%

Gen Y 31%

Gen X 29%

Baby Boomer 20%

Grey Generation 19%

EV Price Sweet Spot $30,000

$32,000

$33,000

$32,000

$33,000

$21,000

$22,000

$24,000

$25,000

$26,000

Australian Automotive Aftermarket Association Dashboard. Presented by ACA Research. Copyright ÂŠ 2019.

Electric Vehicle Timeframes 35

When do Australians expect electric vehicles to become mainstream?

44%

35%

Longer than 10 years

Within 5-10 years

Within 5 years

EV units (millions)

21%

25 20 15 10 5 0

2018

2019

2020

2021

2022

2023

Proje cted M arket Dem and

Source: Deloitte analysis

2024

2025

2026

2027

2028

2029

2030

Proje cted Industry S upply Supply/demand gap

There is a consensus among Australian consumers that EVs will be mainstream within 10 years. Looking ahead to 2030 however, supply is looking set to exceed demand by about 14 million units, meaning that local availability of new models could be challenging. On top of this, the evolution of battery technologies and the global availability of lithium will be critical to a successful EV supply chain. As the world gears up for an electric revolution, the lithium industry that supplies one of its core materials needs to be ready for it. Australian Automotive Aftermarket Association Dashboard. Presented by ACA Research. Copyright ÂŠ 2019.

3. Servicing Behaviour by Generation

Australian Automotive Aftermarket Association Dashboard. Presented by ACA Research. Copyright ÂŠ 2019.

Servicing: Vehicle Type A recent ACA Research consumer survey found that there are some clear generational differences when it comes to how and where people service their vehicles. This starts with the typical type of vehicles people tend to own across different stages of their life. Households with kids (as well as empty nesters, who potentially have fewer financial commitments) are likely to own newer vehicles, with purchases likely to align with their changing life stage and increased or reduced travel requirements. Reflecting this, households with kids are more likely to own SUVs (which make up a higher proportion of the vehicles sold within the past five years).

SINK/ DINK

YOUNG FAMILIES

OLDER FAMILIES

ADULT FAMILIES

EMPTY NESTERS

No children

Youngest child is under 5 years old

Youngest child is 5-16 years old

Youngest child is over 17 years old

Children have left home

<5 YEARS

33%

36%

29%

36%

CAR

76%

56%

60%

69%

67%

SUV

20%

38%

33%

25%

28%

Note: SINK / DINK refers to Single Income No Kids / Dual Income No Kids

Australian Automotive Aftermarket Association Dashboard. Presented by ACA Research. Copyright ÂŠ 2019.

Servicing: Location NOT UNDER WARRANTY

SERVICE LOCATION

SINK/ DINK

YOUNG FAMILIES

OLDER FAMILIES

ADULT FAMILIES

EMPTY NESTERS

CAR DEALERSHIP

40%

28%

34%

30%

37%

INDEPENDENT WORKSHOP

42%

45%

41%

42%

41%

CHAIN WORKSHOP

18%

11%

13%

10%

Note: SINK / DINK refers to Single Income No Kids / Dual Income No Kids

When it comes to where they are servicing their vehicles, all consumers retain a certain likelihood to return to the car dealership when their car is under warranty (particularly empty nesters). Outside of warranty however, this older cohort are much more comparable to other groups, with independent workshops (and to a lesser extent chains), picking up a substantial proportion of the market. Ultimately, consumers are likely to return to a workshop with which they have built a trusting relationship, although younger family groups do place a somewhat greater emphasis on the quality of parts that will be used.

Servicing: Cost & Frequency Young families are paying the most on average per service, also servicing their vehicles most frequently over the course of the year. As a result, on an annualised basis, these groups are spending in the region of $450-$550 on automotive servicing. With these life stage changes bringing substantial cost pressures, workshops need to recognise the importance of tailoring their service offer and communications, to recognise the generational needs and challenges which will exist in their customer base.

GENERATION

SINK/ DINK

YOUNG FAMILIES

OLDER FAMILIES

ADULT FAMILIES

EMPTY NESTERS

MEDIAN COST OF SERVICE

$250

$300

$260

$250

AVERAGE NUMBER OF SERVICES PER YEAR

1.6

1.7

1.8

1.7

1.6

ANNUALISED SPEND $

$400

$510

$468

$425

$400

Note: SINK / DINK refers to Single Income No Kids / Dual Income No Kids

4. Industry Headlines

Australian Automotive Aftermarket Association Dashboard. Presented by ACA Research. Copyright ÂŠ 2019.

Industry Headlines Mercedes not perturbed by no EV incentives MBAP will continue as planned with its electric vehicle (EV) product rollout, spearheaded by the full-electric EQC launching in October, despite the lack of leadership and incentives from the recently elected federal government. Managing director and chief executive Horst von Sanden said consumer appetite for emissions-free models has reached a point where he is confident that EVs now make sense in Australia. Flagship luxury SUVs gain traction despite national decline in vehicle sales If sales of new vehicles are supposed to be down in Australia, no one told the cashed-up buyers of big, beefy and luxurious SUVs costing more than $100,000. To the end of May, sales of these upper-large luxury land yachts are up a healthy 47 per cent on the same period of last year, even though the overall new-vehicle market has declined 8.1 per cent.

Volvo Cars and Uber have announced the next phase of their autonomous vehicle trial with the reveal of one their XC90 large SUV test vehicles The vehicle previewed features safety technology that will allow Uber to easily install its own autonomous driving systems, with the aim to eventually offer an autonomous ride-sharing service.

Australia-first for connected vehicle trial Connected and automated vehicle technology trials will soon begin in Victoria, according to the State Government. The trial uses advanced technology to connect vehicles directly as well as optimised 4G mobile networks to connect vehicles to one another and to traffic management centres with cloud servers using ‘Cellular Vehicle-to-Everything (V2X)’ technology.

Industry Headlines EVs not a threat for parts sector, yet EVs will still require attention from parts suppliers and service providers, despite specialist components and a decrease in mechanical complexity compared to an internal combustionengined car. The local market has some unique challenges to first overcome before EVs can become mainstream, and even when emissions-free models are more widespread, there will still be the ageing Australian carparc to service.

New AAAA research labs could open Australian-designed parts to much larger US market THE Australian Automotive Aftermarket Association (AAAA)â&#x20AC;&#x2122;s new Automotive Innovation Centres (AIC) could pave the way for local parts manufacturers to design and export components to US-centric models such as the full-sized Ford F-Series truck.

Australian Automotive Aftermarket Association Dashboard. Presented by ACA Research. Copyright ÂŠ 2019.

Positive Outlook For Automotive Manufacturing With the dust settling in the wake of car manufacturers ceasing vehicle production in Australia, the automotive manufacturing sector has had to recalibrate, but positive signs are emerging. Although overall revenue and employment numbers are down from 2015 figures, business sentiment within the sector is positive; with reinvention, new ventures and innovation driving an increase in the number of manufacturing businesses operating in Australia.

DIY Vehicle Safety Campaign Launched by ACCC The statistics are alarming. Since 2000, around 120 people have died as a result of do it yourself (DIY) car maintenance accidents and many hundreds have been hospitalised due to injuries. With this in mind, the ACCC has launched a new safety campaign reminding car enthusiasts to take extra care when repairing their vehicles and build awareness and provide advice on the correct, safe procedures for common DIY car maintenance tasks.

About AAAA

About ACA Research

The Australian Automotive Aftermarket Association, is the national industry association representing manufacturers, distributors, wholesalers, importers and retailers of automotive parts and accessories, tools and equipment, as well as providers of vehicle service, repair and modification services in Australia.

With over 20 years of automotive experience, ACA Research has developed a detailed understanding of the automotive sector, Using this market knowledge, we design and deliver research that helps our clients understand and overcome their business issues, empowering them to move forward with confidence.

For more information, please contact:

Lesley Yates

Ben Selwyn

Suite 16, Building 3, 195 Wellington Rd Clayton VIC 3168 Australia +61 (3) 9545 3333 | 0402 005 476 lyates@aaaa.com.au

Level 6, 107 Mount St North Sydney NSW 2060 Australia +61 (2) 9927 3333 | 0411 132 166 bselwyn@acaresearch.com.au

Senior Manager Government Relations & Advocacy Australian Automotive Aftermarket Association (AAAA) Convenor: Automotive Products Manufacturers & Exporters Council (APMEC)

Director ACA Research

Australian Automotive Aftermarket Association Dashboard. Presented by ACA Research. Copyright ÂŠ 2019.