Australians are shunning the smallest and cheapest new vehicles money can buy, despite the total market running at an all-time high.
To the end of May, 469,571 new vehicles were sold, up 3.8 per cent on last year’s record. SUVs and light commercials alike are showing double-digit growth, offsetting the decline in conventional passenger cars (as classified by industry VFACTS data).
Nowhere has this decline in passenger car sales been so steep as the drops in both the Micro Car and Light Car segments, which are down 27.3 per cent and 14.9 per cent respectively.
The biggest impact on the market comes from the decline in light cars. At this time last year, 46,519 units had been sold, giving them 10.3 per cent market share. In 2016 to date these figures have plummeted to 39,582 and 8.4 per cent apiece.
A quick run down the list of best-known light cars in alphabetical order shows a largely unanimous drop.
Consider the Ford Fiesta (down 43 per cent to 1199), Holden Barina (down 20 per cent to 2065), Honda Jazz (down 3 per cent to 3587), Mazda 2 (down 2 per cent to 5908), Renault Clio (down 31 per cent to 749), Suzuki Swift (down 20 per cent to 3905), Toyota Yaris (down 15 per cent to 5174) and Volkswagen Polo (down 9 per cent to 3359).
Bucking the trend are the massively discounted Hyundai Accent, now the market leader over the Mazda 2 (up 122 per cent to 6586), Kia Rio (up 20 per cent to 2883) and the new Skoda Fabia (up 88 per cent to 392).
Interestingly, sales at the premium end of the light segment are actually ticking over well, up 9.1 per cent, thanks to the Audi A1 (up 29 per cent to 878). However, the market’s other traditional volume drivers are struggling (Mini is down 3 per cent and the Peugeot 208 is down 9 per cent).
More stark than the drop in light cars is the continued precipitous fall of Micro Cars, down again this year after a terrible 2015. The Fiat 500 (down 55 per cent to 504), Mitsubishi Mirage (down 35 per cent to 910) and Suzuki Celerio (down 8 per cent to 451) continue to struggle.
Likewise, combined sales of the axed Holden Barina Spark and its Holden Spark replacement are down on last year’s Barina Spark total (14.5 per cent to 495), while the Fiat Panda has been discontinued, meaning 176 lost sales.
Bucking the trend is the new Kia Picanto (204 incremental sales, and the market leader in its first full month on sale) and the Nissan Micra (up 54 per cent to 729). However, the Nissan’s sales are strong because the company is cleaning the decks, having followed Fiat and Volkswagen’s lead by planning to exit the segment altogether. As we know, the Micra is no more, in Australia.
So what’s causing this drop? Logically one may guess that people are shunning light cars to buy discounted small cars such as the Hyundai i30, given you can get one for less than $20k drive-away. And while small car sales as a whole are also way down, much of these are likely falling prey to the booming medium SUV market, which is up 22 per cent.
Likewise, sale of small SUVs are almost 3000 units this year (7 per cent), meaning a fair portion of potential Mazda 2 buyers are buying CX-3s, Jazz buyers are opting for HR-Vs and so on, so forth. Given the skinny margins of light cars compared to SUVs, it’s hard to see dealers being unhappy.
Finally, one cannot underestimate the role being played by current fuel prices, which remain relatively low.
And what of micro cars? It’s likely that many sales here are instead going to late-model used vehicles, or people are getting much more expensive cars on cut-price finance deals, created by Australia’s intensely competitive marketplace.
Expect the Picanto and Spark to kick things along a little, but given the fact that the Nissan Micra, Fiat Panda and Volkswagen Up! have all been axed by their makers from Australia in recent memory, it serves to reason that the segment's prognosis isn’t brilliant.