The Toyota MR2 Spyder

The Australian car market has stormed to a stunning finish to 2000 recording the second highest sales on record and recovering from a near disastrous 11 percent downturn mid year, writes Mike Duffy.

Record demand in December boosted full year sales to 787,100 units, a result bettered only in 1998 when 807,669 new cars and commercials were registered.

What so nearly proved catastrophic for the car industry Down Under ended with an end-of-year bonanza for showrooms.

The Federal Government paid scant regard for the future vitality of the industry by giving 12 months’ notice of cheaper vehicles under a Goods and Services Tax (GST), scheduled for introduction on July 1, 2000.

Politicians used the lure of $A3000 off the price of a family saloon to help sell its switch from a 22 percent wholesale sales tax to a 10 percent across-the-board consumption-based tax.

The car industry initially welcomed the move, but not the buyers’ strike which steadily gathered momentum in the months leading up to the go-live date. Traffic in new vehicle showrooms slowed to a walk in April, May and June.

Australia’s four car makers, Holden, Ford, Toyota and Mitsubishi Motors and 40 or so vehicle importers spent a fortune to keep the market moving. Volvo even offered post-GST prices months before the new tax was introduced in a bid to sustain sales – a move which angered the rest of the industry which was lobbying behind the scenes for a cut in wholesale sales tax to 10 percent and a seamless switch.

The slump caused the number of cars ‘on the grass’ to reach alarming levels and those who still managed to write business were cutting margins to the bone purely to shift stock which was costing a fortune on finance plans.

The Ford Falcon

The whole industry breathed a collective sigh of relief when July 1 and GST finally arrived. Car prices duly fell by 6 percent.

But the expected rush to snap up vehicles at the lower price never really materialised. July showed meagre improvement, but fleet buyers who account for 70 percent of total sales remained on the sidelines, waiting for the impact of the new tax on used car values.

The return to normality has been a gradual process. But in the final quarter, lost ground was made up in the grand style as buyers – private and fleet – returned to showrooms in large numbers.

An industry which never ceases to find new ways of re-defining ‘Murphy’s Law’ once again came up with a new way of saying if things can go wrong, they most certainly will.

While stockpiles were cleared and new stocks began to be shipped in, the Aussie dollar took a pounding against the all-powerful US dollar and the yen.

In a price-sensitive marketplace in which buyers, not manufacturers or importers, were setting prices, no-one dared move to recover currency losses. Most manufacturers began to take a loss every time they sold a vehicle.

In a three month period, the dollar devalued by 20 percent to $US0.50 and 56 yen – frightening numbers which were a recipe for bankruptcy.

The impact has proved expensive. So much so, Toyota Australia, which ended 2000 as market leader after a battle with Holden, General Motors’ Australian subsidiary, announced on Monday (8/1/00) that its balance sheet for last year will be written in red ink.

The Holden Astra City

And after selling 158,908 cars, four wheel drives and commercials for 20.2 percent of the total market, rewriting its own sales record books, and out-gunning Ford Australia in the passenger segment for the first time, that is anything but the company’s advertising slogan ‘Oh, What a Feeling’ to jump about.

Toyota Australia’s senior executive vice president, John Conomos, is tipping a possible 10 percent rise in vehicle prices just to recover the current cost of currency.

If the winners have been the losers, then what of the losers?

Holden recorded its highest annual passenger car sales since 1979, scoring the third successive year of leadership in the passenger segment, according to VFACTS figures released by the Federal Chamber of Automotive Industries.

Holden sold 122,313 passenger vehicles in 2000, beating Toyota by 29,534 and Ford by 34,419 for 19.7 percent market share.

Commodore became the nation’s top selling car for the fifth consecutive year and while it missed out by 3771 units to take out market leadership, Holden has not been giving as much away as its rival in dealer programme assistance and is a racing certainty to book a handy profit.

Ford Australia is a former market leader which has fallen on hard times, due to design work on its bread-winning Falcon large car which failed to thrill its following, and the loss of its Kia-produced small car, the Festiva.

Ford came in a distant third behind Toyota and Holden with 113,810 units for, by its former standards, a low 14.5 percent of the market.

Mitsubishi Motors Australia Ltd (MMAL) has been plagued all year by rumour and innuendo that its parent Mitsubishi Motors Corporation of Japan – now controlled by DaimlerChrysler – would close its loss-making Adelaide plant largely because Diamantes made there for the U.S. market have not met sales targets.

A cash injection of $A172 million ($US97 million) from Japan gave MMAL a new sense of belonging and the troubled car maker finished the year strongly for an annual tally of 73,241 cars and commercials or 9.3 percent of the market.

Nissan finished the year as the best performing importer with 45,867 units, marginally ahead of South Korea’s Hyundai on 45,331.

Honda, Mazda and Subaru all ended 2000 within 3000 units of one another with Daewoo rounding off the top 10.

In the final wash-up, the total passenger car market came in at 553,673 units – 6,101 vehicles or 1.1 per up on 1999.

Only half the market segments performed ahead of the previous year. Growth mainly was driven by the small car market which was up 17,075 or 12.5 percent. People movers were up 4177 (55.3 percent) and sports cars grew by 1456 or 18 percent.

The Mitsubishi Magna

Prestige cars were up 690 or 2.4 percent but large cars like Ford’s Falcon and Holden’s Commodore – traditional family transport in Australia – fell by 9357 or 4.5 percent. Medium cars slid by 4638 units (10.2 percent); light cars were down by 2767 (3 percent) and luxury cars went into decline by 535 or 2.7 percent.

The light truck market totalled 213,571 which was 5250 units or 2.4 percent down.

The all terrain station wagon segment continued to grow. The compact segment was up 2424 units (6.6 percent); the medium segment grew by 1305 (3.4 percent) and the large four wheel drive segment dropped by 2274 or 8.1 percent.

Top 10 manufacturers

Make 2000 sales Market share

20.2 percent

19.7 percent

14.5 percent

9.3 percent

5.8 percent

5.8 percent

3.8 percent

3.5 percent

3.4 percent

2.6 percent

Author Mike Duffy is motoring editor of The Advertiser and Sunday Mail in Adelaide, South Australia