No more new car brands: Australian dealer body makes bold plea as sale skyrocket
Amid another year of record new-car deliveries, the peak body for Australia’s car dealers wants a freeze on the number of brands arriving on our shores.
Australia is on track for a new record number of vehicles delivered in a year, with high fuel prices ironically driving a boom in EV, hybrid and PHEV sales – all the while a glut of brands from China keep adding their names to the shopping lists of customers.
The number of brands on sale in Australia has grown from approximately 40 just five years ago to nearly 70 now, and there’s more to come.
This boom has led to an ever larger fragmenting of the pie, with the sheer volume of sales not responding to the increased number of brands, something which the peak body for Australia’s car dealers warns is placing its members under severe pressure.
In a media statement, Australian Automotive Dealer Association (AADA) CEO James Voortman said that while Australia’s new-car sales are on track for a record year, the quarter ending in September was not profitable, a first since the GFC of the late 2000s.
“This is a clear warning that the commercial settings underpinning our industry are becoming unsustainable,” Voortman said.
“The sheer number of brands arriving in Australia at a rapid pace is having profound consequences for Australian consumers and businesses alike.
“Dealers are facing intense competition, relentless pressure to take more stock and rising business costs. Too often, they are left to absorb the financial consequences of decisions made elsewhere in the supply chain.”
“There are simply too many manufacturers operating in this market and we need a pause on further car brands entering this market. At a time when other countries are trying to slow the rate of change and number of brands, Australia is allowing unfettered access to this market.”
Speaking to the rising number of brands in the market, Voortman said the increased manufacturer showroom presence isn’t directly linked to support for dealers, despite the headline figures.
“Australians benefit from choice and competition, but manufacturers’ growth ambitions must reflect what this market can support,” Voortman said.
“Pushing excessive stock onto dealers is fuelling a race to the bottom. Aggressive discounting erodes margins and devalues vehicles while dealers carry the financing costs and risk of unsold vehicles.
“Strong headline vehicle sales can conceal serious financial distress at the businesses making those sales. Dealers cannot keep absorbing higher costs, lower margins and greater stock risk indefinitely.
“Dealers invest in local jobs, apprenticeships, technical training and the servicing and warranty support motorists rely on. Governments, manufacturers and suppliers all have a stake in keeping that network viable.”
Jordan Mulach
The AADA has called on Governments, as well as manufacturers and suppliers, to support its 10-point plan to curb pressure on its members.
These include:
- Pause the entry of further car brands
- Fast-track dealer protections
- Fast-track Australian Consumer Law (ACL) reform
- Remove barriers to restructuring
- Deliver immediate pricing relief
- Establish dealer councils
- Match stock to customer demand
- Provide excess inventory relief
- Compensate dealers promptly
- Pause non-essential capital demands and relax restrictions on multi-franchising
Earlier today, industry figures showed a record sales month for October, with the new-car market already cracking one million deliveries for the year.
