Sales in the most popular part of Australia’s new car market — small cars under $40,000 — plummeted in May as the segment wore attacks from multiple fronts.
Sub-$40K small car registrations in May were recorded by VFACTS as 16,043 units, which represents a 17.1 per cent drop on May 2014. The overall market share of all small cars declined last month from 22.0 per cent to 18.6 per cent.
This is broadly reflective of the annual trend, in which sub-$40K small cars are down 10.7 per cent year-to-date (YTD).
Taking big hits were Australia's two top-selling vehicles this year (and the past few years before that), the Toyota Corolla and Mazda 3. The Mazda won the segment with 2876 units, but this was down 12.6 per cent. The Corolla took a hit of 30.6 per cent to finish on 2688 units.
Remember, however, that an updated model is almost ready to launch, meaning Toyota might just have been low on stock, and additionally no doubt saw some customers choosing to wait for the facelift.
Other staples of the market also fell, some more than others. The third-placed Volkswagen Golf fell 9.0 per cent to 2093, while the fourth-placed and newly updated Hyundai i30, which almost always occupies the podium, fell 34.7 per cent to 1666.
The Australian-made (with the exception of the wagon) Holden Cruze managed a meagre 1013 units, down 24.7 per cent, the Nissan Pulsar fell 19.7 per cent to 556, the Ford Focus dropped 51.2 per cent to 550 and the Honda Civic dropped 48.2 per cent to 369.
It wasn’t entirely bad news, with the Kia Cerato climbing a huge 94.4 per cent to 974 on the back of very strong driveaway deals, and the Mitsubishi Lancer grew 43.9 per cent to 807 for the same reason. The recently price-cut Subaru Impreza responded well and grew 13.8 per cent to 507.
The decline in small car sales last month was reflective of a general drop in passenger vehicles in May of 7.3 per cent to 40,592, against an overall market contraction of 1.3 per cent.
The overall drop in small car volume is substantial. 16,043 small cars classified as under $40,000 were plated in May, down from 19,345 in May 2014 — a 3302-unit differential.
Given the market drop was much less marked than the drop in small cars, it stands to reason that buyers are simply opting for vehicles priced similarly, but belonging to different size classes.
For instance, at the same time as small cars fell, the passenger segment immediately beneath bucked the trend in May and grew. Light car sales grew 11.1 per cent overall (the same figure YTD too) to 9941 units up from 8944. There’s 997 extra sales right there.
At the same time as passenger sales fell almost across the board, SUVs continued to climb. Total SUV sales were up 5.8 per cent in May to 32,530 (up 13.5 per cent YTD).
Sales of small SUVs classified as being under $40,000 — and therefore likely cross-shopped against small cars — grew from 6910 in May 2014 to 8125 in May this year (up 17.6 per cent for the month and 25.6 per cent YTD) — meaning that, right there, is another 1215 units.
Class leaders here are clearly aimed at prospective Mazda 3 and Corolla buyers, and include the Hyundai ix35, Mazda CX-3, Mitsubishi ASX, Honda HR-V, Subaru XV and Nissan Qashqai. Each of these cars are priced broadly in line with mid- and higher-specification small cars.
Notably, Toyota does not have an entrant here. Hyundai soon won’t either, as its Tucson launching next month as an ix35 replacement is bigger. Its sub-compact SUV for the globe, called Creta, may or may not come to Australia.
There’s also some cross-shopping between small cars and lower-grade medium SUVs such as the Mazda CX-5, Toyota RAV4 and Nissan X-Trail. But this segment did not grow so markedly, up 1.4 per cent to 9812 units (an additional 134 units). This segment is, however, up 10.5 per cent YTD.
Correlation does not imply causality, but numbers suggest pretty clearly where to pin the blame for the drop in small car sales. That said, so long as the affected brands have offerings in those segments, their dealers have the product to keep them within the company.