AAAA Dashboard - Q3 2021 by aaaa710

DASHBOARD Q3 2021

The voice of the independent aftermarket in Australia Welcome to the Q3 2021 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. State of the Market

Workshop Projections

3. EV Growth Forecasts

4. Industry Headlines

1. State of the Market

Australian Economic Indicators Consumer Confidence

106.4

(6.6)

Westpac Melbourne Institute (Q3’ 21, vs. Q2’ 21)

Fuel Prices

Business Confidence

107.8

(23.5)

Roy Morgan (Q3’ 21, vs. Q2’ 21)

Consumer confidence has declined in Q3 off the back of tightened lockdowns and increased cases of COVID-19. Despite this, the negative effects of the second wave of COVID-19 were not as significant on consumer confidence as the initial outbreak. In fact, consumer confidence is 19.3 points above the same quarter last year.

Business confidence has also dropped off the back of business closures and LGA restrictions. Businesses are however now far better equipped to adapt to the lockdown restrictions with improved work from home protocols. Additionally, many restaurants and café’s already had processes in place to remain open offering takeaway services.

It can be expected that Q4 will show some improvement as vaccination rates increase and restrictions ease toward the end of the year.

As the nation moves close toward reaching vaccination goals and subsequently easing restrictions, business will be able to operate more freely. Business confidence can also be expected to rebound through Q4.

$1.53

( 11c)

AiP - Ave weekly price (Q3’ 21, vs. Q2’ 21) We can see that fuel prices have continued to rise in Q3 2021, as international crude oil prices remain high. This trend is likely to hold true, driving fuel prices higher in the short to medium term As freedoms begin to return for all States, we also expect to see a substantial increase in the demand for fuel (as Australians need their vehicles to get out and about). In turn, this is likely to maintain upward pressure on local fuel prices as vendors try to keep up with increased demand.

New Vehicle Sales by Quarter As in previous years, Q3 saw a decline in new vehicles sales after the EOFY sales period. They key difference this year however are the increased lockdowns and restrictions through Q3, which would have contributed to the 18% decline in new vehicle sales. Despite this, some positives can be taken away from Q3 2021, in that sales are 23% higher than the same period last year. While stock availability will remain an issue into 2022, we can expect to see an increase through Q4 as the country emerges form lockdown.

248,672

2021 sales volume in Q3

+23%

350,000 300,000 250,000 200,000 150,000 100,000 50,000 0

Year-on-Year

257,028 202,476

Q3 2019

Q3 2020

Q2 Q3 2021

New Vehicle Sales by State The strong sales results are again largely consistent across the country, with double digit YoY growth across all states and territories, bar NSW and ACT. The dip for NSW is expected, as they have been in lockdown for much of Q3 2021 (whereas there was generally freedom of movement in Q3 2020). The main concern for the other States will be the impact of extended lockdowns on consumers’ propensity to purchase vehicles. However, with vaccination targets starting to be met all over Australia, we anticipate lockdowns to ease sooner rather than later. From an aftermarket perspective, this can only be positive as Australians are also likely to increase their vehicle usage, and the associated servicing and repair requirements.

Q3 Volume

% Chng (YoY)

Q3 Share

New South Wales

69,682

-6%

28%

Victoria

65,107

79%

26%

Queensland

58,308

27%

23%

Western Australia

27,449

23%

11%

South Australia

17,442

20%

Tasmania

4,833

31%

Australian Capital Territory

3,240

-24%

Northern Territory

2,611

37%

248,672

+23%

State

TOTAL

New Vehicle Sales By Marque Q3 Rank

Make 2021

Q3 Volume

% Chng YoY

Q Share

Toyota

57,818

41%

23%

Mazda

23,119

Ford

16,386

23%

4 2

Hyundai

15,535

5 1

Kia

15,422

6 1

Mitsubishi

14,709

12%

Isuzu

12,164

113%

8 1

Volkswagen

11,424

14%

9 1

9,334

140%

10 1

Subaru

8,670

23%

TOTAL

248,672

+23%

Toyota 57,818 vehicles sold Given their extended period of market leadership, it’s no surprise that Toyota again retains first spot. The impressive statistic though is its 23% market share, as it sold more vehicles than Mazda, Ford, and Hyundai combined. While Toyota’s performance does overshadow other elements, we’ve also seen strong performance from Ford as it clearly locked in 3rd place (up 23% in Q3 sales YoY). Going down the list, we can then see a largely fragmented market, with less than 1,700 sales separating 3rd and 6th. The big winner in this group is Hyundai, overtaking its stablemate Kia and Mitsubishi to sit just 850 sales behind Ford (who is in 3rd place).

Further down the list, we’ve also seen strong gains from Isuzu and MG, which highlights the ongoing competitiveness within this part of the market.

2. Workshop Projections

Car Parc Growth Projected Growth of Passenger/LCV Car Parc to 2025 19.7M (+9.1%)

20,000,000

by 325k vehicles per year

19,000,000

18.1M

The Australian Car Parc has enjoyed steady growth since 2016; forecasting this to the future, it will grow from 18.1 million vehicles in January 2020 to an estimated almost 20 million vehicles by 2025.

18,000,000

17,000,000

On average, the Car Parc grows

16.8M

16,000,000

15,000,000 2016

2017

2018

2019

Car Parc (ABS)

2020

2021

2022

2023

2024

2025

Growth is forecast to remain largely consistent over time, even given the disruption to 2020 by the COVID pandemic. Although new vehicle sales were heavily impacted, lower scrappage rates mean that overall car parc growth remained relatively steady.

Growth Projection (Linear)

Workshop Growth 30,000

26.9K (+9.3%)

Service & repair workshops are

24.6K 25,000

22.9K

expected to grow by 2.3k by 2025

20,000

15,000

14.5K (+6.1%)

13.7K

13.2K

10,000

12.4K (+13.3%)

10.9K

9.8K

As with the car parc, automotive workshops have enjoyed relatively stable growth over the past 5 years. Based on this, we can forecast an additional 2,300 aftermarket workshops will enter the market over the next five years, taking the sector to 26,900 businesses. Breaking this down further, we can see that this growth is largely driven by non-employing workshops, with 1,500 more of these entering the market, as against 800 employing workshops.

5,000

2016

2017

2018 Overall

2019

2020

2021

Non-employing

2022

2023

2024

2025

Employing

Workshop vs. Car Parc Growth No. of Vehicles

No. of Workshops

25,000,000

26.9K

30,000

24.6K 25,000

20,000,000

19.7M

18.1M

15,000,000

20,000

There are 734 vehicles per workshop in 2020 As of 2020, there were 734 passenger cars/LCVs in the car parc for every workshop in operation.

15,000 10,000,000 10,000

5,000,000

5,000

2016

2017

2018

2019

2020

Car Parc

2021

2022

2023

2024

2025

Workshops

Comparing car parc and workshop growth, we can see that the trajectory of each is largely proportional, meaning that this should remain largely consistent out to 2025. However, given workshop growth is being driven by non-employing workshops, the overall capacity of these workshops to handle volume may be less than what is expected. As a result, the sector may either need more workshops, or require larger workshops to increase the volume of vehicles serviced.

3. EV Growth Forecasts

Projected Growth of EV New Vehicle Sales EVs as a proportion of New Vehicle Sales 60%

50%

SCENARIO 3

40%

33% SCENARIO 2

30%

25% SCENARIO 1 20%

10%

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

While the rise of EVs has been anticipated for quite some time, we are still recording low rates of take-up, with EVs making up less than 1% of new vehicles sales.

Given the more mature nature of global automotive markets, and the growing prominence of the conversation locally, this will change in coming years. Looking at EV uptake in countries such as Norway, we know that uptake is likely to increase exponentially once certain thresholds have been reached. Three alternative scenarios have therefore been modelled, taking Australia forward to a future state in 2030 where electric vehicles make up 25%, 33%, or 50% of new vehicles sold.

2030

Projected Share of EVs in Car Parc Projected EV Share of Car Parc in 2030

The most optimistic scenario has EVs

10%

making up just 5.6% of the car parc in 2030

9% 8% 7%

5.6%

SCENARIO 3

3.8%

SCENARIO 2

3.2% SCENARIO 1

2% 1% 0%

Sales of electric vehicles will grow significantly in the coming decade, but how will this impact the car parc more broadly? To get a sense of the position EVs will occupy in 2030, we use: ▪ Projected new vehicle sales (excluding the impact of the COVID-19 pandemic) ▪ EV share of new vehicle sales according to our three scenarios ▪ Projected growth in the overall car parc

The key takeaway here is that even on the most optimistic scenario, EVs would make up just 5.6% of the car parc in 2030. While this equates to approximately 1.2m EVs, it is clear that combustion engines are here to stay for the foreseeable future.

2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Source: Source: 2016-20 ABS Motor Vehicle Census Australian Automotive Aftermarket Association Dashboard. Presented by ACA Research. Copyright © 2021.

4. Industry Headlines

Industry Headlines Could your vehicle be dangerous? ANCAP reveals average age of vehicles involved in fata crashes The Australasian New Car Assessment Program (ANCAP) has recently revealed that the average of vehicles involved in fatal crashes has risen from 12.5-13.4 years from 2014 to 2019. It was found that 42% of fatal crashes involved in fatal crashes we built before 2005, which worryingly make up 22% of overall registered fleet. Conversely, only 10% of vehicles five years old or younger were involved in fatal crashes.

New Bapcor TV Spot Released In Line with Tokyo Olympic Games Bapcor is the Asia Pacific’s leading provider of vehicle parts, accessories, equipment, service and solutions. Bapcor launched its new campaign during the Olympics – ’The unseen parts of every Australian journey’. Interestingly, this is Bapcor’s first campaign with AJF Partnership as their creative services. This campaign highlights the important role that Bapcor plays in the lives of every Australian. AJF Creative Director, Andy Jones adds that ‘[i]t serves to illustrate the expansive nature of an Australian owned and operated brand with over 1000 locations and 5000 staff.’

Get ready to mingle at the Collision Repair Expo 2022 The Collision Repair Expo has been officially given confirmation and will take place between the 7-9th of April 2022. The event will take place at the Melbourne Convention and Exhibition Center and will showcase the industries leading companies in collision repair equipment, products tools and more. With an abundance of new technology and innovation in the vehicle industry, there should be a lot for the expected 10,000 visitors to be excited about.

Brake fluid market size 2021 with CAGR of 3.7%, Top growth companies: BP, Exon Mobil, Total Global break fluid market was valued at USD $17757.7 million in 2020 and is expected to grow exponentially with a compounding annual growth rate of 3.7% from 2021 to 2026. The automotive aftermarket was found to make up the highest proportion of break fluid sales, around half of the total market. BP, Exxon Mobil, Total, Fuchs and Bendix were found to be among the top manufacturers in the break fluid market, with a high range if competition in the industry.

Ineos plans to support independent mechanics and the 4x4 aftermarket With the launch of the Grenadier in 2022, Off-road startup Ineos plans to work with aftermarket 4x4 companies and independent mechanics, not against them. With a focus on remote areas within Australia, Ineos claims it will support 4x4 and independent mechanics with training, parts and data. The Grenadier is expected to land in Australia in late 2022.

Automotive Aftermarket E-Retailing Market Expects to Record Growth of $56.7Bn between 2021 and 2025 The global automotive aftermarket e-retailing market is expected to grow by around USD $5billion in the next 5 years with a CAGR above 20%. The growth in 2021 alone has been around 19.50%, with North America contributing 36% of it. The market is highly fragmented, with some of the industry leaders including Advanced Auto Parts, Alibaba, Amazon and CarParts.com.

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

Mark Bastoulis

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

Account Executive ACA Research 9927 3317 mbastoulis@acaresearch.com.au

7-8 Bastow Place Mulgrave VIC 3170 Australia +61 (3) 9545 3333 | 0402 005 476 lyates@aaaa.com.au

Level 6, 54 Miller St North Sydney NSW 2060 Australia +61 (2) 9927 3333