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The June edition of the Automotive Insights Report (AIR) shows a growing oversupply of used cars in Australia as the gap widens between cars listed for sale and cars sold at the end of the financial year.

The monthly used car market data put out by the AADA and AutoGrab shows that listings grew by 2.1% in June while sales remained largely flat increasing marginally by 0.3%.

The increase in supply has seen used vehicle values decrease across the board, with discounting leading to customers quickly snapping up bargains and average days to sell hitting a 12-month low.

“Buyers are benefitting from the fact that there are a greater variety of used vehicles available for sale at lower prices. Nevertheless, we have not seen a surge in sales relative to listings which may be a result of softer economic conditions as evidenced by the drop in new car sales in June,” said AADA CEO James Voortman.

“The outlier is the Western Australian market which saw an almost 13% drop in used car listings along with a healthy 6.1% increase in sales, meaning the supply situation in the West is tighter than the east coast,” said Mr Voortman.

“Light commercial vehicles, such as utes and vans have greater levels of oversupply than passenger vehicles and SUVs. Utes were the only segment which experienced a decline in sales in June, although they still made up three (Ranger, Hilux and Triton) of the four top selling used vehicles,” he said.

“The declining trend in retained values continues with every vehicle segment across every age category experiencing a reduction in value for the month,” he said.

Vehicles which hold their values best are now almost exclusively small vehicles in the passenger segment with the Toyota Corolla being the best performer in the 2-4 year old (99.8%) segment and the Toyota Yaris in 5-7 year old (99.0%) segment. In the SUV segment the Suzuki Jimny is the frontrunner, holding its value at an extraordinary 116.9% in the 2-4 year old category.

HIGHLIGHTS FROM THE AIR FOR JUNE

• 302,848 vehicles are listed for sale, an increase of 2.1% compared to the previous month.
• Listings experienced the highest increase in the ACT (12.5%), the Northern Territory (9.7%) and Queensland (7.5%). Western Australia was an outlier with a 12.9% reduction in listings.
• 192,266 used cars were sold in June, an increase of 0.3% from the previous month.
• Sales were strongest in the NT (12.4%) and weakest in Victoria (-4.6%).
• Average time to sell a used car is 43.8 days, the lowest it has been over the past 12 months.
• Retained values continue their gradual decline with passenger vehicles holding their value best in the 2-4 year age bracket (83.3%) as well as for the older 5-7 year category (69.1%).
• The Ford Ranger remains Australia’s best-selling used car, followed by the Toyota Hilux.

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The May edition of the Automotive Insights Report shows the number of used cars for sale in Australia continuing to grow, putting downward pressure on prices, which in turn is leading to an uptick in sales.

Used car listings sustained their growth of recent months increasing by 7.2% from the previous month while sales of used cars increased by 4.4%.

“Ongoing strength in the new car market means that we are seeing an increased supply of used vehicles coming to market, providing consumers with more options at more affordable price points,” said AADA CEO James Voortman.

“We expect this trend to continue, particularly in the next few months leading into the end of the financial year, which traditionally sees increased activity in both the new and used car market,” Mr Voortman said.

“Over the past month we have seen a marked reduction in used cars being listed by Dealers as more Australians seek to sell their cars privately. With the prevalence of online scams, odometer fraud and the lack of statutory protections when buying private, consumers need to exercise due diligence when engaging in a private-to-private used car transaction,” Mr Voortman said.

“We are also seeing strong sales results for lower emissions vehicles with Hybrids (+6.6%), EVs (+8.0%) and PHEVs (+16.6%) growing above average. EVs were the only fuel type to experience a reduction in supply, which is to be expected given the significant mismatch between demand and supply of used EVs,” he said.

“The average time to sell a used car has increased slightly to 45.5 days, a likely product of the improving supply situation which is also driving a reduction in retained values across all segments,” Mr Voortman added.

“Vehicles with the strongest retained values are largely sought after and reliable Japanese makes in both the passenger car and SUV segments as well as in the 2-4 year and 5-7 year categories,” he said.

“The Ford Ranger has built on its impressive lead as Australia’s top selling used vehicle and is close to breaching the 6,000 monthly sales mark. The Toyota Hilux comes in second well ahead of the rest of the pack which includes four utes in the top 10,” he said.

“With the end of the financial year nearly here, Australians are making major selling or purchasing decisions, which has led to the used car inventory approaching an oversupply. This is not an unexpected shift and has been met with increased demand and sales for used cars across every state in the country. The retained value of vehicles has continued to fall while the days to sell has increased, reflecting the oversupply of used vehicles,” said Saxon Odgers, Chief Commercial Officer of AutoGrab.

“It is also worth highlighting May’s increase in private inventory for sale, in comparison to April. This reflects past years, as we see an increase in vehicle transactions at the end of the financial year. We expect this to increase further in June and see great buying opportunities as a result,” said Mr.Odgers.

HIGHLIGHTS FROM THE AIR FOR MAY

• 296,542 vehicles are listed for sale, an increase of 7.2% compared to the previous month.
• Listings grew in every state and territory with South Australia experiencing the highest increase with 8.5% and Tasmania being the lowest at 2.0%%.
• 191,625 used cars were sold in May, an increase of 4.4% from the previous month.
• Sales grew in every state and territory with Queensland and the ACT experiencing the biggest monthly increase in sales of 7.3%.
• Petrol and Diesel vehicles dominate the used car market, but there has been strong growth in lower emissions vehicles, such as hybrids, EVs and PHEVs.
• Average time to sell a used car is 45.5 days, an increase of over a day from the previous month.
• Retained values continue their gradual decline with passenger vehicles holding their value best in the 2-4 year age bracket (84.1%) as well as for the older 5-7 year category (69.8%).
• The Ford Ranger remains Australia’s best-selling used car, followed by the Toyota Hilux.

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The peak body representing franchised new car Dealers has today noted the passage of the New Vehicle Efficiency Standard.

“New car Dealers have supported the introduction of a Standard for a long time, and while we consider this to be an ambitious standard which will be very challenging to achieve, Dealers are ready to play their part in significantly lowering vehicle emissions,” said AADA CEO Mr James Voortman.

“This policy ushers in a major transition in Australia’s automotive retail sector and new car Dealers as a customer facing industry will be central to supporting consumers as they transition to low and zero emissions vehicles. We are confident that Australia’s nearly 3,200 new car dealerships and their 61,000 employees have a bright future,” he said.

While this legislation is a significant reform, there is a lot more complementary work needed to ensure lower emissions vehicles are affordable and that Australians buying these vehicles have access to charging infrastructure.

“One key element being the $60 million dealership charging fund to assist Dealers in installing charging infrastructure to support the transition to selling and servicing electric vehicles,” said Mr Voortman.

This policy also underscores the need to investigate issues around automotive franchising reform as compliance with the NVES and the arrival of many new manufacturers will put Australian Dealers at greater risk.

“Now that the legislation has passed, we will focus on working with the Government to ensure implementation is as smooth as possible. In particular, we will push for the compliance of this scheme to move from the point of import to the point of sale over time,” he said.

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The peak body representing franchised new car Dealers has welcomed the release of the 2024-25 Federal Budget tonight.

“This Budget includes some welcome measures for our industry, including $60 million for the Dealer charging fund. The fund will help new car Dealers with installing EV charging infrastructure in their businesses in support of the transition to selling and servicing electric vehicles,” said AADA CEO Mr James Voortman.

“We also welcome the announcement of $3 million to implement the Government’s response to the Review of the Franchising Code of Conduct, which will be used to investigate the feasibility of a licensing model and remake and update the Code prior to its expiration in April 2025,” he said.

“These are important investments in supporting Australian new car Dealers as employers of over 61,000 people, particularly as we head into a period of unprecedented structural change in the industry,” said Mr Voortman.

“While the AADA would have liked to see a resurrection of the previous scheme, we welcome the 12-month extension of the current small business instant asset write-off scheme,” he said.

In contrast, this budget highlights the continuing impost on Australian drivers through automotive taxes such as the Luxury Car Tax and Passenger Vehicle Tariff, with the Government estimated to collect almost $1.7 billion this financial year from these taxes alone.

“We consider these to be outdated taxes, which are a relic from an era when Australia manufactured vehicles here. Particularly the Luxury Car Tax which often applies to more efficient vehicles and applies to optional features which discourage consumer uptake of safety features,” said Mr Voortman.

These figures highlight recent calls made by the AADA, that Australia needs a comprehensive review of automotive taxes, particularly as we seek to accelerate the uptake of EVs and low emissions vehicles.

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The Automotive Insights Report data for the month of April shows the market for used cars in Australia is stabilising with a steady decline in supply and demand holding firm.

“There were 183,575 used cars sold in April, representing a slight 0.3% decrease on the previous month while vehicles listed for sale reduced by 3.8%, highlighting a trend of declining listings since the end of 2023. It will be interesting to see if this trend persists given the record number of new cars being sold,” said AADA CEO James Voortman.

“The used market for hybrids and electric vehicles is booming and for the third consecutive month sales of hybrids (5.7% growth) EVs (9.5% growth) and PHEVs (2.7% growth) all outperformed the overall market.”

“There is still a significant oversupply of EVs relative to other fuel types, but the mismatch between demand and supply seems to be reducing with EV sales growing at the same time as EV listings decline,” he said.

“The average time to sell a used car has remained around the 44-day mark for the past three months, significantly down from the 12-month high of 52 days in November, indicating the market is stabilising.”

“Retained values continue to decline gradually across all segments with passenger vehicles holding up slightly better than SUVs and LCVs. Given the fact that the gap between used car supply and demand is reducing, it will be interesting to see what the effect will be on retained values and length of time to sell,” he said.

“The Ford Ranger is Australia’s undisputed favourite used car. Having topped the used car sales charts for the first three months of the year, the Ranger built on that dominance in April increasing its lead on its rivals with sales growing by an impressive 7.4%,” Mr Voortman said.

“The Hilux came in second on the sales charts, one of four Toyota models in the top ten, cementing the Japanese manufacturer’s status as the Australian market leader in both new and used car sales,” he said.

“While sales volumes underlines Australia’s love for utes, retained values show that the most in demand cars in the 2-4 year category were sports cars and smaller passenger cars while in the 4-7 year category small and large SUVs rule the roost,” said Mr Voortman.

Highlights from the AIR for April were:

• 276,719 vehicles are listed for sale, a decrease of 3.8% compared to the previous month.
• Listings were down in every state and territory, except for the ACT and South Australia which recorded minor increases.
• 183,575 used cars were sold in April, a minor decrease of 0.3% from the previous month.
• The NT and South Australia both outperformed in sales with increases over 6%. New South Wales saw the largest decline with a 4.3% reduction in sales.
• Sales of EVs grew for the third month in a row, this time by 9.5% while PHEVs grew by 2.7%.
• Hybrid sales also saw decent growth with an increase of 5.7% compared to March.
• Average time to sell a used car is 44.3 days, almost exactly the same as last month.
• Retained values continue their gradual decline with passenger vehicles holding their value best for vehicles in the 2-4 year age bracket (84.9%) while utes perform best for the older 5-7 year category (70.6%).
• The Ford Ranger remains Australia’s best-selling used car, the top 6 best selling cars remained the same in April as they were in March.

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The AADA notes the Government’s response to the Independent Review of the Franchising Code of Conduct, which has agreed, or agreed in principle, to all of Dr Schaper’s 23 recommendations.

“Overall automotive Dealers across Australia will look at this response with a degree of disappointment and we urge the Government to keep an open mind on introducing stronger automotive-specific franchising regulations,” said AADA CEO James Voortman.

“Over the past five years we have seen numerous examples of poor behaviour by multinational manufacturers ranging from GM’s termination of 200 Holden Dealers to Mercedes-Benz strongarming their Dealers into one-sided agency arrangements,” he said.

“The New Vehicle Efficiency Standard due to take effect in less than eight months will make Dealers even more vulnerable to manufacturers exiting the Australian market and leaving Dealers with stranded investments,” said Mr Voortman.

“With the changes occurring in the industry, there is no doubt that further disputes between manufacturers and Dealers will occur. It’s not a case of if, but when. Frankly, we need protections for Dealers similar to those offered in the United States,” he said.

“Automotive franchised Dealers employ tens of thousands of Australians across cities and regional areas. They make significant investments in infrastructure and contribute to their community charities and sporting clubs” he said.

“The recent case between Mercedes-Benz Dealers and Mercedes-Benz Australia/Pacific Pty Ltd highlighted the current failings of the Franchising Code with the presiding Judge stating that further consideration of the terms of the Code and possible reforms are needed, and we are disappointed that this was not picked up in the Review,” said Mr Voortman.

“While we consider that the review could have gone further to protect automotive franchisees, we welcome the extension of some protections to Truck Dealers, although we maintain that Truck Dealers should enjoy all the protections under Part 5 of the Code,” he said.

“Furthermore, we support the consideration of a licencing regime for franchisors which could allow for better dispute resolution and the assurance that service and repair work conducted by motor vehicle dealerships should be explicitly captured by the Code,” he said.

AADA will continue to engage with the Government to put forward the need for strong protections for local automotive businesses.

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The Australian Automotive Dealer Association welcomes the announcement by Minister O’Connor and Minister Bowen that the New Energy Apprenticeships Program will now be expanded to include apprentices in the automotive sector.

“This $10,000 in support will help encourage prospective apprentices to look to the automotive sector as an industry with long-term employment prospects supporting Australia’s net zero ambitions,” said AADA CEO Mr James Voortman.

“This is a critical time for the sector, with new technology coming to market it is important that Australia has a well-trained workforce to service, repair and maintain electric vehicles,” he said.

“The changes to this scheme which remove a requirement that an apprentice’s work be solely dedicated to clean energy, is a welcome recognition that along with servicing and repairing new technologies such as EVs and hybrids, automotive technicians will continue to provide services for traditional ICE vehicles well into the future,” said Mr Voortman.

The announcement notes the critical need for incentives to encourage more people into sectors that are playing a key role in transitioning Australia to a net zero economy such as is the case with electric vehicles.

EV uptake is increasing rapidly, and they are an important technology to achieve emissions reductions in the light vehicle sector.

“The shift toward EVs offers immense opportunity for the development of new skills in Australia and it is exciting to see this recognised and supported through schemes such as the New Energy Apprenticeships Program,” he said.

“The automotive sector, as with many other sectors in the economy is going through a skills shortage. It is estimated that the automotive service and repair industry is short over 40,000 workers.”

“With new policies such as the New Vehicle Efficiency Standard seeking to accelerate the uptake of EVs, particularly in the passenger vehicle space, it is more important than ever that the industry has access to incentives to encourage workers to participate and train in these clean energy technologies,” said Mr Voortman.

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Australia has posted an impressive used car sales result for the month of March despite the disruption in trade brought on by the Easter holidays.

“There were 184,054 used cars sold in March which is a very impressive result considering the number of trading days lost through weekends and public holidays,” said AADA CEO James Voortman.

“Ongoing strength in new car sales has improved the supply situation on the used car market leading to more choice and improved affordability. Consumers are in a good position to shop around and negotiate a good price for a used car,” he said.

“The used market for electric vehicles is gradually emerging with strong growth in the number of listings and cars sold. Sales of EVs grew by an impressive 13.1% while PHEVs grew by 8.9%. Customers in the market for a used EV have plenty of bargaining power as the number of listed vehicles is well above the number being sold.”

“The average time to sell a used car is now the lowest it has been for 12 months which tells us that sellers are becoming more pragmatic and buyers are taking advantage of lower prices of used cars,” said Mr Voortman.

“Amid all the talk of fuel efficiency standards in recent months, this data underscores the resilience of the ute market. Utes aged 2-4 years were the only category which did not see a reduction in retained value and the likes of the Ranger, Hilux and Triton experienced significant increases in sales from the previous month,” he said.

“While retained values continue to trend downwards, the cars which are holding their value the best are smaller used cars such as the Toyota Yaris, the Honda Jazz and the Mazda 2 which are all highly sought after by Australians.”

“The Ford Ranger remains Australia’s best-selling used car, while Australia’s love affair with Toyota is demonstrated by the fact that it makes up five of the top ten used cars sold in March,” Mr Voortman said.

AutoGrab’s COO Saxon Odgers said, “March was another strong month for Australia’s used car market. While prices of used cars eased slightly, pleasingly the average days to sell remained steady at a low point for the past 12 months at 44 days. We have seen several manufacturers recently reduce the prices of their new cars, with this flowing through to pricing in the second hand market.”

“EV sales grew at a more than 13% which is substantially higher than petrol, diesel and hybrid vehicles. EVs still make up less than 1 per cent of the used car market, with Australians continuing to prefer Ranger’s, Hilux’s and Corolla’s,” said Mr Odgers.

Highlights from the AIR for March were:

• 287,620 vehicles are listed for sale, a slight increase of 0.5% compared to the previous month.
• Western Australia led the nation with increased listings of 5.6% while the Northern Territory saw a reduction in listings of 6.7%.
• 184,054 used cars were sold in March, an increase of 2.6% from the previous month.
• New South Wales saw by far the biggest monthly increase in sales of 7.1% while sales in the Northern Territory declined by 6.2%.
• The used market for electric vehicles is slowly emerging with strong growth in the number of listings and cars sold.
• Sales of EVs grew by an impressive 13.1% while PHEVs grew by 8.9%.
• Average time to sell a used car is 44.2 days, the the lowest it has been for 12 months.
• Retained values continue their gradual decline with passenger vehicles holding their value best for vehicles in the 2-4 year age bracket (85.1%) while utes perform best for the older 5-7 year category (71.3%).
• The Ford Ranger remains Australia’s best-selling used car, followed by the Toyota Hilux.

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A new report prepared for the Australian Automotive Dealer Association by respected climate risk and energy transition experts Energetics outlines the task of rolling out electric vehicle charging infrastructure in Australia’s new car dealerships.

Energetics’ analysis found that the investment needed in charging infrastructure is estimated to exceed $1 billion for franchised new car Dealers in Australia.

“The cost of chargers and associated network upgrades is significant, but Dealers understand the importance of investing in this infrastructure and their role in educating customers on EVs,” said AADA CEO James Voortman.

“New car dealerships will be at the forefront of rolling out EV chargers as manufacturers require them to install chargers in their showrooms and service departments as part of their franchise agreements.”

“Many consumers considering taking the leap and buying a new EV are looking for their Dealer to provide education about the vehicle and the charging experience. The availability of EV chargers in dealerships means vehicles in stock can be charged and made available for test drives while buyers can also see first-hand how charging works,” said Mr Voortman.

“Evidence suggests, the majority of new EV owners will be servicing their vehicles with an authorised repairer under manufacturer warranty, so it’s important that Dealers can ensure these vehicles are able to be charged,” he said.

“This report makes an important contribution to this issue, especially in light of Energy Minister Chris Bowen’s recent announcement of $60 million in support of car Dealers installing EV chargers.”

“The work done by Energetics can be an important resource for the Government in developing the details of the $60 million car Dealer charging fund,” Mr Voortman said.

Energetics’ analysis found that:

• Investment needed in infrastructure is estimated to exceed $1 billion for franchised new car Dealers in Australia.
• With over 3,100 Dealers nationwide, the capital investment is expected to range from $130,000 for a typical regional Dealer to $580,000 for a typical rural Dealer.
• The rollout of EVs is anticipated to occur in metropolitan areas at a faster rate initially than regional and rural locations. This is mainly due to the availability of the necessary infrastructure. Customer demand is also expected to be greater in metropolitan locations.
• As rural dealerships are assumed to require the largest upgrades to electrical infrastructure, upgrade costs are higher than those for metropolitan and regional dealerships.
• Dealerships need to carefully consider the type of EV chargers installed on-site. Some locations may not need Level 3 charging capacity (e.g. metropolitan and regional dealerships), although this will often be determined by the OEM and written into Dealer Agreements.
• Dealerships may face lead times of up to two years for the installation of certain infrastructure. These include electrical infrastructure upgrades (e.g. installation/upgrading of transformers) and charging requirements (e.g. Level 3). Rural dealerships can expect longer delays.
• Dealership employees will be supporting the marketing, sale, and service of EVs.
• OEMs may have their own emissions reductions targets. They may also respond to new vehicle efficiency standards globally. Both factors can lead to expectations and requirements of their dealerships with regards to the implementation of EV charging infrastructure and the range of EVs for sale. Noting some OEMs may be able to share the financial burden of the new EV infrastructure, and Dealers should investigate any such potential.
• Australia’s new National Vehicle Emissions Standards (NVES) will likely increase the demand for plug-in hybrid electric vehicles and EVs, requiring Dealers to invest in onsite charging and infrastructure upgrades.

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The Australian Automotive Dealer Association notes the Government’s announcement today unveiling the details of the New Vehicle Efficiency Standard (NVES) and while we acknowledge the progress, we remain conscious of the challenges facing our members.

“This is not the Vehicle Emissions Standard the industry has asked for, but we recognise that the Government has listened to industry and made significant changes to its original policy and is seeking to strike a balance between the needs of competing interests,” said AADA CEO James Voortman.

“We welcome the revision of the LCV headline targets, the recategorisation of body on frame SUVs into the LCV category, and the commitment to provide $60 million to boost EV charging at Australian dealerships. We are now committed to working with the Government on a range of key issues affecting Dealers including – ensuring that the compliance for this policy is at the point of sale, not the point of importation; implementing meaningful automotive franchising reform; and addressing the enormous investment task facing Dealers in this transition,” he said.

“These are critically important issues for automotive retailers and if left unaddressed, the NVES could have dire consequences for Dealers – we welcome the Government’s commitment to work with us on these matters,” said Mr Voortman.

“Make no mistake, this is a major regulatory intervention into the automotive industry and while we understand and accept the Government’s objectives, we would also urge them to work with industry to identify any unintended consequences arising from this policy,” he said.

“As this policy is implemented over the next five years, we will need the Government to keep an open mind on these standards and to constantly review developments within the market and make sensible changes if required,” he said.

“The first review will commence in 2026 and this will be an opportunity to assess the first two years of the NVES, but also determine whether the settings are appropriate for the incredibly challenging outer years of the policy,” said Mr Voortman.

“This is a contentious issue in our industry and there is a great deal of anxiety among Dealers. We urge the Government to consider the needs of these businesses which employ more than 60,000 people, invest in cities and towns across the nation and which provide so much support and sponsorship to their communities,” he said.

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