Deloitte Motor Industry Services
2011 Industry Overview
The annual 2010 Deloitte Motor Industry Overview has highlighted how the motor industry experienced startlingly different results during 2010. Results from the first six months of the year benefitted from the flow on effect of the investment allowance, production slowdown and lower interest rate, with record sales across the industry.
However according to the report’s author, Danny Rezek, Deloitte Motor Industry Services partner, the second half of 2010 was a different game. Incentives were gone and interest rates started to increase causing a net profit decline of 30% over the last six months of the year for the average dealer.
Mr Rezek highlighted that despite Australian motor vehicle sales for 2010 eclipsing the million mark for the third time in history, dealerships experienced a decline in profitability for new vehicle sales, due to leaner margins, a competitive market, and higher overhead expenses
The report attributes a range of factors including the government stimulus package ending, rising interest rates, fewer tax incentives, lower levels of inventory and tightening of expenses which produced declining growth profit margins for new and used vehicles.
According to Mr Rezek, 2010 was a challenging period for the automotive industry. Average dealers suffered with a profit margin decline of 30% over the last six months, from a high of 2.5% to around 1.8% for the most recent six months.
Key highlights of the 2011 report were:
- Overall market leadership went once again to Toyota for the eighth consecutive year, selling 214,718 vehicles, up 6.8% on the previous year with a 20.7% market share
- Holden finished a distant second behind Toyota and the Holden Commodore achieved the title of Australia’s top selling model for the 15th consecutive year
- As economy and fuel considerations became more important for the consumer, the small and light car segments have significantly grown and now represents close to a quarter of total sales
- The USA was eclipsed by China for the first time in 2009 relinquishing their title as the world’s largest automotive retail market and sales in the USA fell from 16.1 million in 2007 to just 11.5 million in 2010.
- China overtook the USA to claim the title of the world’s largest automotive market in 2010 with 18.1 million vehicles sold, ahead of the best market the USA has ever achieved
- Only 14% of vehicles sold in the Australian market in 2010 were locally produced. In the mid 1990s it was around 50%
- It is anticipated the Chinese domestic market will exceed more than that of the USA and European markets combined with over 35 million units by 2020
- The strong Australian dollar has helped importers and the Australian market is now one of the most open and competitive in the world
- The long term future of the Australian automotive industry rests in successful export programs and the strong Australian dollar has made it challenging for exporters over recent times.