It is and has been a difficult time for Australia’s car dealerships.

There has been a fairly consistent downward spiral for Australia’s new car sales lasting longer than during the 2007-2008 Global Financial Crisis when 15 months of consecutive declines were recorded.

The lack of a financial crisis and low interest rates suggests different reasoning this time, and this is outlined in a new report by advisory and investment firm KordaMentha. The report suggests the downturn is due to digital transformation and changes to consumer behaviour, with car ownership models being disrupted. The uptake of on-demand services like ride and car sharing and autonomous vehicles, are all impacting negatively on new car sales.

Across Australia new car sales are down 8 per cent year-on-year.

The slowing consumer behaviour is making for tough times in the car sales industry, said Motor Trades Association of Queensland CEO, Dr Brett Dale.

“This is a tough time… and we do need to ride this out,” he said.

Changes to bank lending criteria are harming new car purchases, with people finding it tough to raise the required cash, Dr Dale said.

He encouraged consumers, industry and the government to be optimistic about the future.

“If the Australian Government is legitimate about stimulating the economy we need to be working to demonstrate calm,” he said.

“We stood out during the global financial crisis and we can ride this one. There is light at the end of the tunnel.”

Queensland has 674 car and motorbike dealerships, according to the KordaMentha report.

Of the national 3,500 new vehicle dealerships, 85 per cent are owned by individual operators or family groups.

The acquisition of smaller dealerships by larger players is expected to continue, resulting in further closures across the industry.

Dr Dale said it was difficult to estimate the number of dealerships that had closed in the past five years. He said where dealers had closed, like on the once-prosperous Moorooka magic mile, others had opened in different areas.

“Look at the Auto Mall at Brisbane Airport, that’s going to be massive,” he said.

“Where there are closures there are developments well underway to replace them.”

The KordaMentha Report says consumers are looking for a more convenient retail experience and challenging the current dealership model.

A hair salon, spa and fine dining restaurant are some of the newest offerings for Mercedes Benz’s new Brisbane dealership which opened at Breakfast Creek on 1 August.

LSH Australia Auto Group director John Good said the company wanted to reach beyond the regular Mercedes Benz customers and agreed the Australian car industry was facing short-term troubles but said things would turn around in the long run.

“We’re very confident in the Australian market… we have long-term confidence in the Australian market,” he said.

9 September 2019

Source: Courier Mail