If you’re an Australian OEM new-car importer or retailer, business is getting tougher. Here’s an effective way you can get ahead.
Competition in Australia’s new-car market is intensifying.
New-car stock levels are returning to pre-pandemic levels.
Newer car brands, many from China, are earning unexpected market shares.
And a growing cost-of-living crisis is making Australian consumers cautious.
Australia might have reset the record for annual new-car sales recently (1,216,780 in 2023, or 2.3% higher than the 2017 record) and a set new January record last month, but don’t be fooled:
If you’re an official OEM new-car importer or one of their retail dealers or agents, the market is facing some tough challenges.
Greater new-vehicle supply means car brands and their dealers need to compete more, typically with lower prices.
Newer competitors, who enter the market with already-lower prices, are intensifying this challenge.
Add to this higher interest rates, which are making cheaper new-car finance deals harder to find, and fund.
The inescapable fact is clear: selling less, for less, means lower revenues and profits.
Reduced returns are making it harder to grow (and even sustain) a business as a new-car importer and retailer.
Pitcher Partners details Australia’s 2024 market’s situation in this article. It’s worth reading.
In the US, Automotive News has reported the six major publicly listed dealer groups finished Q4 in 2023 with double-digit falls in new-car gross profits. They cited high interest rates, higher vehicle prices and a steadier supply chain as the reasons.
In Europe, the EU car market suffered a 3.3% decline during December 2023. It was the first month of contracted sales after 16 consecutive months of growth.
These aren’t rosy images but OEM importers and retailers have options.
One effective tool is local product enhancement.
Australia’s local enhancement programs tap into specific product desires for Aussie new-car buyers. It gives them everything the aftermarket offers but with the trust of OEM-level engineering integration, and the and comfort of a new-car warranty.
For Australia’s new-car buyers these programs offer great value, because they get what they want for less than the cost of modifying the car themselves.
For the OEM importer and their retailers, they offer a business boost.
Here’s one very small example:
Our team developed an optional wheel, tyre and suspension package for a major car brand overseas. This package offers sportier performance for buyers of one specific new-car model (which is produced in six-figure quantities each year.) The business case for this package was profitable if customer uptake was at least 4%. It was more than 45% from launch. Several years on, it still is.
We’ve been doing OEM-level local enhancement programs for carmakers for decades. Demand for them in Australia has grown in the last 18 months.
Endlessly slashing prices won’t sustain or build a new-car business. Only one thing will compel a value-conscious shopper to buy, and that’s the car.
Not the cheaper price, but the car.
Despite the current market conditions there are plenty of buyers prepared to pay a little more for the car they want, because it suits their needs. And there’s a whole market of them here just in Australia.
As I said at the beginning, competition in Australia’s new-car market is intensifying. It’s only going to escalate.
If you’re a stressed-out CEO for CFO for an OEM importer or retail group, it’s time to consider getting ahead.
Enhance your current model range. It’s what Australian buyers want.
You’ll likely capture more new-car buyers, and at better prices.
Other brands are already reaping the benefits.
Bernie Quinn – Engineering Director, Premcar Pty Ltd
About Premcar – Premcar Pty Ltd is a leading Australian vehicle engineering business that specialises in the automotive, defence and aerospace industries. For more than 25 years, global car-makers have made Premcar their go-to partner for the complete design, engineering and manufacture of niche-model new cars, full-scale new-vehicle development programs, and electric vehicle (EV) conversions and manufacturing. Premcar’s body of work is extensive. It is the name behind more than 200,000 new cars and 55,000 new-vehicle engines. The company has delivered technical advancements and sales success for major car brands from Europe, the USA, Japan, China and Australia. Visit premcar.au.
Follow Premcar on Instagram – @premcaraustralia
Follow Premcar on LinkedIn – @Premcar Pty Ltd
