news

Luxury car brands grow sales, as market shrinks

While sales of new vehicles overall have fallen a further 10 per cent in 2020, there seems to be a different pattern forming among premium brands.


VFACTS data sourced from the Federal Chamber of Automotive Industries shows that a number of more expensive marques have either recorded sales increases this year, or at the least fallen at a slower rate than the overall market.

Brands that have grown by volume include Porsche (up 279 sales this year compared to the same period in 2019, equal to around 56 per cent growth), Audi (239 more sales, up about 10 per cent), Land Rover (187 more sales, up nearly 17 per cent), Volvo Car (127 more sales, up 12 per cent), BMW (43 more sales, up 1.1 per cent) and Lexus (35 more sales, up 2.4 per cent).

The leading luxury brand, Mercedes-Benz Cars, has sold 118 fewer vehicles this year than it did over the same period in 2019. However this is equal to a drop of only 2.5 per cent, a smaller proportional decline than the overall market. Mini has declined 53 units, by 8.9 per cent.

 

Drive

For further context, the data also shows sales increases in half (6/12) of the dedicated 'premium' vehicle segments.

Small Cars above $40,000 (led by Mercedes-Benz A-Class) are up 11 per cent; Upper Large Cars above $100,000 are up 78 per cent (led by BMW 6 Series GT), Small SUVs above $40,000 are up 20 per cent (led by BMW X1), Medium SUVs above $60,000 are up 24 per cent( (led by Mercedes-Benz GLC), Large SUVs over $70,000 are up 33 per cent (led by Mercedes-Benz GLE); and Upper Large SUVs above 100,000 are up 6 per cent (led by Land Rover Discovery).

Some ultra-luxury brands have also hung in there well: Maserati (up 21 per cent), Ferrari (up 21 per cent), Aston Martin (up 38.5 per cent), and Rolls-Royce (up 150 per cent), come to mind.

The only premium brands with anything approaching scale to have declined are Alfa Romeo (down 38 sales, 22 per cent) and Jaguar (down 97 sales, 25 per cent).

 

Drive

So, what's going on?

First, luxury car sales are hugely contingent on where a popular model sits within its usual life-cycle period. When a luxury player gets an all-new version of a top-seller, it helps.

For example most of Audi's growth has come from the new Q3 (up 272 per cent), most of BMW's has come from the new 3 Series (up 83 per cent), most of Land Rover's has come from the new Range Rover Evoque (up 432 per cent), most of Mercedes-Benz's has come from the new GLE (up 530 per cent), Porsche's has come from the updated Macan (up 124 per cent), and Volvo's from the XC60.

All bar the last car mentioned there was launched inside the last 12 months or so. Volvo's XC60 growth is likely down to its improving sales allowing the company to better-fund its marketing department.

Beyond this we turn to chief economist for CommSec, Craig James, who said: "Luxury vehicle sales are growing... Low rates and higher home prices give budding vehicle buyers more purchasing power."

Could it be that buyers looking at luxury cars are leveraging low interest rates and the subsequent mortgage payments, and buying nice cars instead of tipping the savings into their portfolio? Perhaps.

On a side note, this writer can't imagine the ASX's current position is going to help premium brands.

 

Drive

Background

It’s now been 23 successive months of fewer sales than the corresponding month in the previous year, and sales are now the lowest they’ve been since 2011 when the Global Financial Crisis was intimately shaping purchasing behaviour.

February was also just the second month where Australia’s new-car sales were counted under a new reporting method, cross-checking manufacturer-supplied data with actual registrations. So, it’s not entirely apples for apples. But the differences will only be stark for those OEMs that were counting unsold demos as 'sold'.

The FCAI attributes the market conditions to “a number of adverse factors directly affecting consumer confidence over 2018, 2019 and the beginning of 2020”.

These include political and financial uncertainty; environmental factors such as floods, drought and bushfires; and more recently, the growing concerns regarding a global pandemic from the coronavirus. Let's also keep in mind currency flows that are counting against the AUD, meaning imports become costlier to sell.

Chat with us!







Chat with Agent