Market Insight: Government sales hurting car-makers

CAR sales took a massive dive across federal, state and government sectors last month, highlighting reduced public-sector spending and continued cutbacks that saw new-vehicle registrations across all tiers of government slump 22.5 per cent – including a 32.7 per cent fall in passenger cars.

While the Federal Chamber of Automotive Industries (FCAI) has declined to comment on potential reasons behind the government sales downturn, the peak industry body used its monthly overview to emphasise the August result that has dragged government sales down 9.7 per cent – or almost 3800 vehicles – for the year to date.

Just 4091 government sales across Australia were recorded last month, bringing the running total to 35,129 and pointing to around 52,000 for the calendar year, based on the current monthly average.

This would represent a new low for government sales – and a fresh blow for the local car manufacturing industry – after dropping below 60,000 for the first time in recent memory last year.

In 2005, more than 87,500 government sales were recorded.

Last month’s public-sector sales decline was most striking in the passenger-car segment, where sales fell 32.7 per cent to just 1975 units. Government SUV sales were also off 19.5 per cent (910) and light commercials down 0.7 per cent (1206).

From top: Toyota Camry and Aurion Holden Cruze and Commodore.

Official figures obtained by GoAuto show that last month’s downturn was reflected across federal, state and local government sectors, with federal sales down 46 per cent (to 258), state sales down 14 per cent (2935) and local government sales down 27 per cent (1103).

Lower sales are also seen across the board on a year-to-date basis, with federal (on 2753 units), state (25,918) and local government (8618) down 31, four and five per cent respectively.

Overall government passenger-car sales are down 16.8 per cent YTD to just over 17,000 units, SUV sales are down 0.4 per cent (to 7773) and light commercial vehicles are 2.9 per cent in arrears on 10,312.

The sales downturn has hit both locally built and imported cars, but the plight of Australian car-makers comes into sharp focus with figures showing that the federal, state and local government sectors have all bought more imports than Aussie cars YTD (see separate story).

At a federal level, this has happened despite fleet purchasing rules that require Australian-made cars to be given precedence over imports by federal fleet managers or senior department officials.

August was another tough month for the Australian car-makers, with sales of locally manufactured cars down 16 per cent to just 11,927 units on the back of Holden falling 23.8 per cent (5987) and Ford down 16.4 per cent (3246).

The Altona-built Camry has kept Toyota in positive territory, up 9.7 per cent across both Camry and Aurion last month (2694) to be up 12.5 per cent for the year at just over 20,000 units.

Holden, which is now relying heavily on Cruze to compensate for Commodore’s sales decline, is up 1.1 per cent YTD with its Elizabeth-built vehicles (to 48,185), while Ford’s Broadmeadows-built models are down 7.5 per cent in 2012 to 23,166 – just 3157 units ahead of Toyota.

Commodore, Aurion and Falcon sedan sales were down 33.9, 33.5 and 18.7 per cent respectively in August, leaving the six-cylinder Toyota 12.6 per cent in arrears for the year and its two traditionally big-volume rivals both down 27 per cent YTD.

For the local light commercials, sales of Ford and Holden’s utes were down 9.6 and 21.2 per cent respectively in August, and 10.6 and 19.4 per cent YTD.

As GoAuto has previously reported, privatisation of public-owned companies and massive public-service cutbacks have seen government vehicle sales fall away dramatically in recent years, from more than 87,500 in 2005 to 60,000 by 2009.

These came back 5.6 per cent in 2010 to 63,477, only to drop 8.5 per cent last year to 58,091 units.

Based on the current running rate, government sales are zeroing in on 52,700 for the full year, although substantial declines like last month could see the final result for 2012 much worse than that.

This is a worrying trend for local manufacturers and could prove problematic in the longer term for the broader Australian motor industry, which relies heavily on public and private fleet sales.

There are a host of factors inherent in the decline of government sales, but it should also be seen in the context of the current overall industry, which remains on record pace this year and on track to achieve 1.09 million sales – thanks largely to consumer and business confidence, in imported vehicles.