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Real estate recovery set to drive luxury car sales in 2020

The Australian new-car market is in the middle of its biggest slump since the Global Financial Crisis, but the top end of town is doing just fine.


Luxury cars are set to defy the rest of the automotive industry by posting massive sales gains in 2020 – as the overall market fell to its lowest tally in 10 years last month.

BMW believes the recent recovery in real estate prices will help drive the prestige car market, which surged in sales in January.

Official sales figures for luxury SUVs in January 2020 shows models priced between $40,000 and $60,000 were up by 30 per cent, the $60,000 to $70,000 bracket was up by 27 per cent, the $70,000 to $100,000 range was up by 28 per cent, while top end SUVs priced above $100,000 were up by 14.5 per cent.

The sales increases in the luxury SUV segment come as the rest of the car industry went backwards by 12.5 per cent to post the lowest January recorded since 2009.

“At a macro level we can see some kind of revival in the luxury segment,” said BMW Australia boss Vikram Pawah. “We’ve seen a direct correlation with house prices, particularly in the Sydney market, and premium car sales.”

When asked if all luxury-car brands are likely to have a strong year following a tough 2019, Mr Pawah said: “I can’t talk about the overall luxury market because it’s dependent on what other brands are doing … but I can tell you we will grow, better than what we did last year that’s for sure. We are going to buck the trend.”

Although BMW slipped by 6.3 per cent in January, it has 16 new or refreshed models on the way this year to give it a boost, and claims it is well placed to take advantage of the shift to SUVs. 

BMW says more than 60 per cent of its sales are now of SUV models and, following the introduction of 17 new models last year, the company claims it has the newest line-up in the prestige segment.

BMW said the luxury-car sector had finally adjusted to more stringent lending practices in the wake of the Royal Commission into the banking sector, and more customers were now getting finance approvals after an extended period of an increase in knockbacks.

“The finance attachment rates are going up (more customers are getting finance approval),” said Mr Pawah.

While only two car brands in the Top 15 posted sales gains in January 2020 compared to the same month the prior year, most marques in the luxury sector were in positive territory.

Luxury brands that posted increases in January 2020 include Audi (up 12.9 per cent), Land Rover (up 35 per cent), Ferrari (up 12 per cent), Bentley (up 15 per cent), and Volvo (up 28 per cent), while Porsche (up 121 per cent), Aston Martin (up 100 per cent), and Rolls-Royce (up 100 per cent) posted massive gains from relatively low bases.

BMW (down 6.3 per cent) and Mercedes (down 8.7 per cent) posted sales slides but these declines were not as bad as the rest of the market, which was down by 12.5 per cent.

Joshua Dowling

Joshua Dowling has been a motoring journalist for more than 20 years, spending most of that time working for The Sydney Morning Herald (as motoring editor and one of the early members of the Drive team) and News Corp Australia. He joined CarAdvice / Drive in 2018, and has been a World Car of the Year judge for more than 10 years.

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