The new vehicle sales figures for the first month of 2020 show that sales contracted by over 12 per cent measured against the same period last year. It is certainly no surprise that sales are down given the state of the market over the past 22 months compounded by the drought affecting large parts of the country and the bushfire crisis that has engulfed Australia for the previous three months.
The other factor which may go some way to explaining the January number is that it is the first month for which the Federal Chamber of Automotive Industries (FCAI) has applied its new reporting requirements to the VFACTs product.
In early January FCAI confirmed that all vehicles would have to be registered before being recorded as sold in VFACTs. This represents progress, but it is only the first step and does not stop some OEMs from pressuring their Dealers to register cars as demos in order to achieve incentive targets. Furthermore, it does not stop a shift by the OEMs to move to targets on wholesale volumes, a concerning practice being undertaken by a number of OEMs in recent months.
In fact, too many cars being reported as sold are still not ending up in the hands of a genuine customer. New car Dealers are well aware of the consequences this has for their businesses but are fearful of reprisals if they do not comply.
Another consequence of such reporting practices is that they bring into question the credibility of the VFACTs product. VFACTs is relied on by the likes of the Reserve Bank of Australia, the Australian Bureau of Statistics and market analysts among others to ascertain the health of the economy and the industry.
Last month we suggested ASIC take a look at this in the same way the corporate regulator in the US has, resulting in action against FCA and BMW.
For VFACTs to be credible only vehicles being purchased by a genuine customer should be reported as sold. No demonstrators. No service loan vehicles.
We will continue working with members, the FCAI and Government in an attempt to clean up Australia’s automotive sales reporting practices.