Will we keep on buying new cars?
Back in 2007 the Australian new cars industry passed the magic one million sales, and in 2015 another new record was set. But is that growth, or keeping pace?
TWENTY-FIVE YEARS ago Australia’s population was just 17 million people, and just over half a million cars were sold every year, representing about 3% of the population. That doesn’t mean to say that 3% of people bought a new vehicle because those figures include fleet sales.
In 2015, there were 1.1 million cars sold, more than double, representing about 5% of the population.
Here’s what the last 25 years of population growth and car sales looks like:
So are we buying more new cars per person? Yes, we are. This graph plots the population growth and new car sales volumes:
And it shows that the new car sales growth is above the population growth, and moreover, increasing over time. Australia’s total number of cars is growing too, up to 18 million in 2015, and a pretty steady 6.3% are replaced every year with new vehicles.
Can this be sustained? There are two competing forces at play, and the net result is probably going to be a decline.
On the side of improving car sales are the carmakers efforts, but it’s hard to see how they will entice more people to buy cars as distinct from compete with each other for those who have already decided they need a car. The government might also do much to spur new car sales if it decides to reduce the average age of the Australian car so safety and emissions are improved, although that doesn’t look likely. Its recent moves to change the import laws aren’t going to affect the new car market to any significant degree either.
The bigger factor in new car sales is the one the automotive industry is worried about and not quite sure how they should handle. That would be the decreasing interest in cars among the generation coming up to driving age. An ABC report noted that the “number of under 25s without a driver’s licence has risen from 23 per cent to 35 per cent in just 10 years. In New South Wales, the proportion of young licensed drivers has fallen by around 1 per cent a year. ” And there’s similar statistics wherever you look, including in the USA where CNSW Research reports that people aged 21 to 31 buy 27% of new vehicles in the USA, compared to 38% back in 1985.
No longer do the young look upon the car as the ultimate status symbol – instead, that’s the latest iPhone or Galaxy. They also don’t need cars for rich, instant communication in this day of high-speed, wireless and pervasive Internet over which the likes of Instagram and Snapchat can be used for individual or group conversations, far superior to the rigid and one-dimensional, semi-private phonecalls their parents used to chat to their mates in their youth.
And inter-generational sniping aside, the fact is that these days university is not free, houses are more expensive relative to income than ever, and costs of living are increasing. This means there’s less cash available for a car.
Then we have the ready availability of Uber and rise of car-sharing schemes which mean there’s less need to own a car even if you need one. I’d also argue today’s cars are less evocative than those of yesteryear – the low whine of a hybrid at the lights is not going to inspire a life-long passion in the same way as the throaty grumble of a V8, and the thrill of mastery is not as it once was, hence the premium prices paid for the last generation of cars before electronics took over half the driving. Sooner or later, car companies will realise gadgets to make cars go faster just make them more boring more quickly.
This is an industry-wide problem to which the car companies appear to have no answer other than to attempt to make cars cooler and more appealing to the younger generation, which will work for a little while but ultimately misses the point. It’s time car companies thought of themselves as mobility companies rather than car companies, in the same way that phones are now really communication devices, and telcos – telephone companies – are now communications providers. People will always need to travel, but it won’t always be by cars as we know them now.
The manufacturers that can adapt to the new world are the ones we’re likely to see in 20 years time, and the rest will be footnotes in history next to Nokia.
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9 Comments
The thing that did also spark the new car boom was the rising housing market. As people were selling, they realised they had some money left over to splurge on a new car which they’ve never been able to afford. With the housing market a bit flat and as you mentioned the readily accessible power of a mobile phone to connect with people around the world instantly without the need to physically be there, it makes little sense why we all think of have a car when public transport and alternatives is somewhat adequate for most of Sydney and Melbourne.
Think of this way, when you go to work/see friends/family etc, when you get to your destination, does it even matter how you go there? You’ve got to your destination. You’re there with friends/family/colleagues talking about everything other than your drive in (or perhaps just a sentence saying the traffic was terrible/smooth).
Also doesn’t help that anti social hooning rhetoric being drilled into society that every k is a killer and speed cameras saves lives. The days of excessive speeding, loud doof doof stereos and loud exhaust was once a symbol of adulthood but society has moved from how you got there to focus on the destination and by in large, I reckon we’re moving in the right direction and that’s speaking from someone who still a bit of a petrol head.
No you’re not!
An ace serve for maggie, game over for the guest….Take a bus sunshine.
A petrolhead doesn’t mean someone is just into V8s, big exhausts and burnouts. Many car enthusiasts don’t care for that sort of thing and prefer a subtler kind of appreciation. Also, some enthusiasts are willing to give up on their pleasures for what they see as a bigger picture. Not saying who is wrong and who is right, but being a “car person” is different things to different people, and I never tire of finding new variants on the theme.
Go and get your granny pants and adult diapers, then give up on life “guest” the nanny lover.
Just about the biggest amount of drivel I’ve heard since Tony Abbott last opened his mouth. Clearly you like the drugs, but the drugs don’t like you, how else could you even dream up this stuff.
I’m sure that many with mom and dad’s money and the superannuants will sales up for a while. For others sales will keep going until the interest rate rises. It will really depend on how long that family or cheap money lasts. Even though cars have never been cheaper, the lower wages and high% of part time work in this country will see a reduction of sales. I am more interested to see which companies bribe their way into the huge government vehicle sector over the next few years. MMMM! Which country will get a huge amount of our tax-payer money? Will it be Thailand (already a huge FTA winner) Japan or South Korea? All of which have FTA cheated their way to success in Australia!
There is a real trend of less car reliance in my age group (slightly over 30). Even in a regional town such as Bendigo and among professionals who can afford two cars. I know two lawyers in my age group who are married with children who maintain only one car, it has made me think about whether I need two cars.
Personally I like the freedom of having two and we own our two late model cars outright which are both very reliable so I am not inclined to sell one. But if we only had one, or were forced to replace one then I would start questioning that. Also the situation in life that I am at, not being able to drive anything exciting (like a two door convertible), I have relegated the importance of vehicles to a very low priority.
Interesting, Masterpupil. I also see this trend and so do the car companies. The number of sub-20 year olds who are excited by cars is fewer and fewer. Seems to be a combination of cost and other ways to do what cars once offered.