AAAA Dashboard - Q3 2020 by aaaa710

DASHBOARD Q3 2020

The voice of the independent aftermarket in Australia Welcome to the Q3 2020 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

COVID-19 Mobility Trends

Australian Automotive Aftermarket Association Dashboard. Presented by ACA Research. Copyright ÂŠ 2020.

3. New & Used Vehicle Trends

4. Industry Headlines

1. Current State of the Market

Australian Automotive Aftermarket Association Dashboard. Presented by ACA Research. Copyright ÂŠ 2020.

Australian Economic Indicators Consumer Confidence

87.1

(1.3)

Westpac Melbourne Institute (Q3’20, vs. Q2’20) After reaching a high of 93.7 in June to end the quarter, consumer sentiment plummeted over the next two months, falling to 79.5 in August off the back of the second wave of infections in Victoria. Consumer sentiment has however shown itself to be remarkably resilient, quickly jumping back to 93.8 in September as the number of new cases in Victoria declined, and numbers in other states remained low.

Fuel Prices

Business Confidence

84.3

(2.9)

Roy Morgan (Q3’20, vs. Q2’20) Business confidence was also negatively impacted by the resurgence of infections (and associated lockdowns) in Victoria. However, in contrast to the rebound we saw in consumer confidence, business sentiment remains weaker, with the 10 point drop from June to July persevering throughout Q3.

Looking ahead, businesses are likely to remain cautious until they can see themselves trading in a more ‘normal’ environment, suggesting results could remain subdued through the next quarter.

$1.21

( 9c)

AiP - Ave weekly price (Q3’20, vs. Q2’20) Fuel prices were bound to bounce back from the low we saw in Q2, with averages around (and even below) $1 clearly not sustainable in the longer term. We saw this clearly in Q3, with weekly averages in August fluctuating between $1.16 p/Litre and $1.30 p/Litre. While ongoing questions around the future of local fuel refining is likely to continue uncertainty over the short to medium term, recent activity suggests a trend back towards more typical fuel price cycles.

New Car Sales By Quarter The impact of COVID-19 continues to be felt with new car sales in Q3 down by over 20% when compared to Q3 2019. This equates to 54,500 fewer vehicles sold compared to the same point last year.

202,476

Despite registering the lowest absolute sales numbers of the year so far, this is an improvement from the 27% YOY decline in Q2 (which covers the peak EOFY selling period), which could be an early sign of a tentative recovery.

320,000

2020 sales volume in Q3

300,000

Year-on-Year change

280,000

-21%

260,000 240,000 220,000 200,000 Q1

Q2 2018

Q3 2019

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2020 5

New Car Sales By State While we did see a level of relative improvement in YOY new car sales in Q3 (smaller decline than in Q2), this has not spread evenly across the states. Unsurprisingly, Victoria, under lockdown after a second wave of infections, has halved the number of vehicle sales compared to Q3 2019, while NSW, QLD, and SA are down about 10% YoY. The success stories however are WA, the NT, and particularly the ACT, which have either maintained or even grown sales year on year.

Q3 Volume

% Chng (YoY)

Q3 Share

New South Wales

73,778

-10%

36%

Victoria

36,281

-51%

18%

Queensland

45,783

-10%

23%

Western Australia

22,227

-1%

11%

South Australia

14,529

-14%

Australian Capital Territory

4,278

+11%

Tasmania

3,696

-31%

Northern Territory

1,904

-1%

202,476

-21%

State

TOTAL

Australian Automotive Aftermarket Association Dashboard. Presented by ACA Research. Copyright ÂŠ 2020.

New Car Sales By Marque Q3 Rank

Kia

Make 2020

Q3 Volume

% Chng YoY

Q3 Share

Toyota

40,893

-18%

20%

Mazda

21,727

-8%

10%

Hyundai

14,432

-33%

42

Kia

14,238

51

Ford

13,287

-9%

61

Mitsubishi

13,171

-36%

Volkswagen

9,988

-13%

Nissan

7,874

-39%

91

Subaru

7,037

-33%

101

MercedesBenz

7,015

-11%

TOTAL

208,536

-21%

4th 2

Jump in Rankings

Pulling sales data apart by brand, we can again see a significant level of variation, with some OEMs better equipped to meet customer demands through this challenging period. Kia is our main winner here, maintaining stable sales during Q3. Aided by sales of the new Kia Seltos (introduced in late 2019), this was enough to push it up two places to the 4th highest selling brand of the quarter. Behind Kia, Ford, Mazda, and Mercedes-Benz all outperformed the market, recording a smaller level of decline than most competitors. At the other end of the spectrum, the biggest ‘losers’ in terms of YoY sales were Nissan, Mitsubishi, and Hyundai, with all three recording about a third less sales than the comparable period in 2019.

Despite all of this change, one constant is Toyota remaining at the top of the list. Despite also recording a YoY decline, its share of market is consistently double its closest competitor, emphasizing the strength of the product range it has in market.

2. COVID-19 Mobility Trends

Australian Automotive Aftermarket Association Dashboard. Presented by ACA Research. Copyright ÂŠ 2020.

COVID-19 Impact:

We’re now well into the pandemic, and can use Google mobility data to see how movement patterns are continuing to evolve. While the number of infections has risen and fallen, the overall trend in Q3 largely suggests a continuing, cautious return to regular activities, although Australians are still spending greater than usual amounts of time at home.

Insights from the Google COVID-19 Community Mobility Data

Percentage change in time spent: Q3

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

RESIDENTIAL

-1%

19%

13%

10%

GROCERY & PHARMACIES

-13%

-5%

-3%

RETAIL

-13%

-41%

-25%

-11%

-8%

-18%

-13%

WORKPLACES 12%

-2%

-37%

-21%

-12%

-13%

-16%

-14%

TRANSIT STATIONS

-14%

-52%

-39%

-30%

-31%

-39%

-35%

PARKS

-13%

-33%

-23%

-13%

-10%

-15%

-2%

Despite the easing of lockdown measures in most states, a return to ‘normal’ mobility levels still seems far off, with the large decline in time spent at transit stations, revealing the profound (and likely ongoing) impact of the pandemic on public transport usage. However, with people continuing to shop for essentials (grocery & pharmacy) at regular rates, and a gradual return to workplaces, retailers, and parks, the good news for the aftermarket is that Australians will likely be using their cars where they would previously have used public transport.

COVID-19 Impact:

27%

Insights from ACA Global Fleets Report

Net change in transport usage for business purposes:

During COVID

Of businesses with a fleet believe they will be using employee vehicles for business purposes more in the next 12 months than they were before COVID..

Less time spent at work has unsurprisingly had a large impact on business travel. According to the ACA Research Employee Mobility Insights Report, COVID19â&#x20AC;&#x2122;s impact on business travel will be long-lasting, with respondents predicting usage of shared mobility solutions will remain subdued over the next 12 months.

In 12 months (expected)

18% 0%

In better news for any workshops undertaking fleet servicing, respondents predict that use of company fleet vehicles will return to normal levels in the next 12 months.

-4% -13%

-42% -44%

-48%

-50% -59%

Company vehicles

Employee vehicles

Rental cars

Car sharing

-58% Taxis

-54%

-50%

Ride hailing

Australian Automotive Aftermarket Association Dashboard. Presented by ACA Research. Copyright ÂŠ 2020.

Fleet servicing will however become more complex, with employees increasingly relying on personal vehicles for business travel. This highlights a potentially significant opportunity for the aftermarket, as businesses recognise the need to also monitor servicing of employee-owned vehicles.

2. New & Used Vehicles

Australian Automotive Aftermarket Association Dashboard. Presented by ACA Research. Copyright ÂŠ 2020.

There is no question that the pandemic has impacted new vehicle sales. As we saw in sales by brand though, it’s not consistent across the board.

New Vehicle Sales VFACTS

YOY Change in New vehicle sales (2019-20) Jan

Feb

Mar

-27%

-17%

-25%

Apr

May

Jun

Jul

-26%

-29%

Aug

Sep

Passenger cars -62%

-29% -43%

-52%

SUVs

-2%

-14%

-30%

-3%

-4%

-17%

-22%

-46%

LCVs

-11%

-22%

-15%

-40%

-23%

-11%

-36%

-14%

14%

HCVs

-18%

-13%

-22%

-26%

-9%

-21%

-10%

As can be seen here, Passenger cars are most significantly impacted, clearly underperforming SUVs, as well as light and heavy commercial vehicles (LCVs and HCVs). Consumers are continuing their shift away from passenger vehicles, with growth particularly evident in the light SUV subsegment. Similarly, while June is always a stronger month off the back of EOFY sales, high levels of commercial vehicle activity were driven by increased access to the Federal Government’s instant asset tax write-off scheme. This tells us that despite the impact of the pandemic, Australian workshops are going to keep seeing more SUVs and utes in the years ahead.

Used Vehicle Boom

When we look at the used car market in parallel with new car sales, some interesting observations can be drawn. As discussed In the last dashboard, and based on the continuing shift away from public transport and shared mobility solutions, the used car market is booming (represented by the declining number of listings).

(Insights from ACA Researchâ&#x20AC;&#x2122;s Recovery Playbook) Used Vehicle Listings

ALL CARS

NSW/ACT VIC/TAS QLD WA SA/NT

W/c 25th May 59,509 58,366 35,716 17,659 12,148

W/c 28th Sep 39,131 43,296 21,541 11,797 8,376

TOTAL

183,398

124,141

ALL TRUCKS

-34% -26% -40% -33% -31%

W/c 25th May 2,510 2,312 1,866 657 415

W/c 28th Sep 1,897 1,599 1,251 469 326

-32%

7,760

5,542

% Change

Australian Automotive Aftermarket Association Dashboard. Presented by ACA Research. Copyright ÂŠ 2020.

-24% -31% -33% -29% -21% -29%

If we look at the used trucks market, we can also see a similar trend, with listings declining from the end of Q2 into Q3. Apart from Victoria, the decline for trucks is however less than for cars. This suggests that there is either less demand for trucks, or that the business is going elsewhere. Given trucks are one of the better-performing categories when it comes to new vehicle sales, we would suggest buyers are taking advantage of government incentives, and choosing to buy new. This is potentially risky for aftermarket workshops, as it brings operators back into the OEMs environment, so care will need to be taken to retain servicing business across these fleets.

3. Industry Headlines

Australian Automotive Aftermarket Association Dashboard. Presented by ACA Research. Copyright ÂŠ 2020.

Industry Headlines Bapcor sales bonanza as car owners dress up vehicles The chief executive of the ASX-listed car parts and accessories group behind chains including Autobarn, Burson and Autopro says booming sales in the September quarter stemmed from people wanting to ''dress up'' their vehicles because they couldn't fly anywhere. Darryl Abotomey says many consumers have cash in their pockets because they are unable to travel overseas or interstate in many cases, while a spike in used car sales has also prompted those new owners to want to spruce up their vehicles with better technology and comfort.

Capricorn launches new online resource to help workshop owners Capricorn is assisting its members to navigate through this challenging period by launching an online resource that provides wide-ranging content for all stages of business. CapHub is a content portal providing easy access to valuable expert business tips and advice, automotive workshop hacks and important industry data to help develop and improve your business.

Backlash to Mitsubishi’s plan for 10-year warranty As many as 150 submissions have been lodged with the Australian Competition and Consumer Commission (ACCC) objecting to Mitsubishi’s bid to seek approval to offer a 10-year warranty on the condition that the purchaser exclusively acquires servicing from a Mitsubishi dealership.

Sydney’s roadside power boxes set to become EV chargers Sydney could become the electric car capital of Australia with a plan to convert roadside electricity distribution boxes into electric vehicle charging stations.The ambitious plan is being driven by Sydney-based charging infrastructure startup JOLT in conjunction with NSW electricity supplier Ausgrid. Around 2000 of Ausgrid’s roadside distribution boxes across Sydney, the Central Coast and the Hunter region are said to be suitable for conversion into electric vehicle charging stations that will allow motorist up to 15 minutes of free charging per day, good for around 45km of range in most instances. Those needing longer charge times can choose to a pay a fee through JOLT. Datium Insights: used car prices look to be softening The Datium Insights market update for the week ending October 12, 2020 shows that after six months of strong week-to-week increases, prices look to be softening. It says prices for the top 15 traded vehicles were largely negative with most vehicles seeing small declines.

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

Lizzie Dawson

Director of Government Relations and Advocacy Australian Automotive Aftermarket Association (AAAA) Convenor: Automotive Products Manufacturers & Exporters Council (APMEC)

Director ACA Research 0411 132 166 bselwyn@acaresearch.com.au

Senior Account Manager ACA Research 0433 708 375 ldawson@acaresearch.com.au

7-8 Bastow Place Mulgrave VIC 3170 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

Australian Automotive Aftermarket Association Dashboard. Presented by ACA Research. Copyright ÂŠ 2020.