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Bargain time: Car dealers say market “exceptionally bleak”

It’s not a great time for car dealers but it is a great time for consumers to buy a car.

CAR DEALERS RECKON the going is tough at the moment, with a majority of Australian dealerships revealing in the latest Cox Automotive Australia Dealer Sentiment Index (CAADSI) that “the new car sales environment was exceptionally bleak.”

The index, which is conducted by Cox and the Australia Automotive Dealer Association (AADA), surveys nationwide dealerships to rate business conditions on new and used car sales as well as parts and service.

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According to the results, the latest survey found that compared to Q1 2019 there are fewer customers walking into dealerships and dealer confidence has dropped significantly, with a “very poor view of the current market conditions and do not see conditions improving over the next six months.”

Compared to 2019 results, customer traffic to dealerships dropped from an index of 24 to 14, and it is 50% lower than 2018’s result. Adding to woes is dealer profitability which dropped to 15 from a high of 30 in 2018 – the survey has been run for the last three years only.

Vfacts reported sales data shows car sales are indeed down, sliding 10 per cent lower last month compared to January 2019, and continuing to record lower annual sales number year-on-year.

Cox Automotive Australia’s Director of Marketing and Communications, Matt McAuley said the result from dealers are poor.

“In most of the major survey categories, the indexed results were lower for this survey period compared to early 2019.

“In some cases they were significantly lower and in many cases the results were 50% lower than our first survey which we conducted in Q1 2018. The poor results really illustrate just how challenging it is for franchised dealers in this market and the number of serious issues dealers are facing on a day to day basis,” he said.

“Surveyed dealers cite continued strong pressure to lower prices, increased difficulty in obtaining credit and falling profitability of their F&I departments. It is easy to see why they have a poor view of both the last six months and the next six months given the numerous factors affecting their businesses.”

So what does this mean? Well, it’s a good time to walk into a dealership and bargain for a deal. They want legs in the door and like all normal businesses, want cash in the hand. And that last bit could be important, as dealers say the availability of credit to consumers is an increasing issue since new rules were introduced on loan and credit assessment.

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In the longer term, it is predicted house prices should make a recovery and help boost the economy. Dealers seem to support this notion with their future projections on the market indexing slightly higher than last year.

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Steve Haines
Steve Haines
2 years ago

People are holding off purchasing new combustion engine vehicles waiting for better availability of cheaper electric vehicles (12-18 months). Also people using more ride share.
In less than 10 years very few people will actually own cars as it will be Transport As A Service – car ownership and gasoline cars will go the way of the horse and buggy

Alex Rae

Alex Rae