Market Insight: Ute sales under pressure

THE attention on the Australian car industry remains as strong as ever this year, with crucial new model releases from all three local manufacturers amid continuing discussions at their respective head offices overseas about the future direction of their vehicles and manufacturing operations here.

This is heightened by the sales performance of their Australian-built models, most notably the crucial big-volume sedans (and in Holden’s case, wagon), which all recorded awful results in the first month of this year.

As GoAuto has reported, Ford’s Falcon slumped 50 per cent to a record low 1157 sales, Holden’s Commodore fell 18.4 per cent to 2645 units, and Toyota’s Camry (1057) and Aurion (654) also took hits of 12.0 and 25.1 per cent respectively. Holden’s Caprice was also down 40.8 per cent with just 61 new registrations for the month.

Of course, this is only the first month of the year, but it comes off another negative year for large Australian-built passenger cars – despite the industry returning to a million-unit market. Only Holden managed a positive result, thanks to the new VE Series II.

(The mid-sized Camry was the best of the lot, up 20 per cent last year.) Many factors will be weighing on the minds of the decision-makers in Japan and the United States –profitability, expenditure, exports and so on – not just of the core models being built here, but the sales performance and future prospects of vehicles that are based on the same platform.

These include Ford’s Territory SUV and, crucially for both Ford and Holden, the passenger car-based two-door utilities.

Top: Ford Falcon FG cab chassis. Bottom: Holden Commodore Series II Omega ute.

Utes are easily overlooked in the context of how well Ford and Holden are travelling in local manufacturing terms, but the rise and fall of their sales over the past decade is significant.

As imported one-tonne utilities go from strength to strength, the Australian-built two-door utes have fallen steadily in the past five years to the point where the substantial growth experienced in the early years of this new millennium has been all but wiped out.

Ford has been hit the hardest with the Falcon Ute, but management is expecting a turnaround in sales fortune – for both utility and sedan – when the Blue Oval moves to a new-generation LPG system in the third quarter of this year.

A lack of supply of cars fitted with the current dedicated-LPG system – which makes up around 50 per cent of Falcon Ute sales – is being blamed for the current dent in overall Falcon sales volume.

The Falcon Ute’s 479 sales last month was on an even keel compared with the government tax incentive-fuelled January 2010, but the bigger picture is much bleaker.

As any effect of the tax breaks wore off last year, so too did sales, and Ford finished 2010 with just 9099 new ute registrations – down 25.3 per cent for the year and marking the first time the workhorse has fallen below 10,000 sales for more than a decade, the last time being 1998.

Back then, thanks to the new-generation AU series, Ford managed to increase its ute sales from less than 7000 units to almost 10,500 in 1999, before jumping to almost 14,000 sales in 2000. It continued to climb steadily during the first years of the new millennium with 17,000 sales in 2001, almost 18,000 the following year, then to more than 20,200 by 2003.

Its share of the 4x2 market also peaked during this period at 30 per cent in 2002 – almost double that of last year’s 15.4 per cent share, which was a low point that hadn’t been seen since at least the 1990s.

With Holden also rising during the last decade with its reborn VU (2000), VY (2002) and VZ (2004) utes, and new derivatives such as the 2003-07 Crewman four-door adding weight to the cause, Ford was forced to relinquish market leadership in 2004 and has been on a downward slide ever since.

Although the two brands have fought tooth-and-nail for ute market honours in recent years, Ford’s sales have fallen steadily over the period, down to 18,384 in 2005, to 15,858 the following year, 13,758 in 2007, then to 12,600 in 2008.

Tax incentives during 2009, which was deemed a success in stimulating light commercial vehicle sales, failed to prevent the Falcon falling further to 12,180, prior to last year’s major decline.

However, Holden has not been an obvious beneficiary of Ford’s sales downturn, experiencing its own sustained fall since it passed 20,000 ute sales for the first time in 2004 with a record 22,372 sales (including 1559 4x4 units with the short-lived 2003-2005 Crewman Cross 8).

From a low point of just 6361 sales in 2000, Holden rose steadily to pass 11,000 in the following year as the VU took off, was within striking distance of 14,000 in 2002 and past 17,200 a year later.

But it has never again passed the 22K mark it reached in 2004, falling to 20,200 in 2005, then to 14,000 in 2006 and just 11,520 the following year.

The General’s Aussie ute clawed back to 13,500 in 2008 as the new-generation VE made its mark, before slipping again to 12,100 as the economic downturn hit.

Again, federal tax breaks ensured the final result was not as damaging as it had appeared earlier in the year. The VE Ute was down 41.3 per cent by the end of the first quarter, for example, but finished 2009 just 10 per cent in arrears.

Last year it fell to 11,405 sales, down 5.8 per cent on the previous year – a decline that would presumably have been much more severe had the VE Series II not arrived.

Despite this, the Commodore-based utility fell 30.6 per cent last month with just 522 sales – a few more than Ford managed with the Falcon Ute, but certainly nothing to write home to Detroit about.