Why Australians Won't Buy 1 Million Cars In 2011

There are a number of reasons why Australia’s automotive industry hasn’t been as strong as it should have this year.

Well, what happened? We could look back to as far as 2009, ground zero where it all began. The share market crashed and the Global Financial Crisis hit hard. It was all very much a case of ‘doom and gloom’ and set the tone for what lied ahead.

With the fear of Australia facing a recession in 2009, people became cautious and tightened their budgets. Our government announced an economic stimulus package valued at $47 billion to help encourage spending and counter this defensive human behaviour. The automotive industry was also given assistance by our government, car manufacturers Ford, GM Holden and Toyota all received hand-outs towards projects in Australia.

By 2010 the automotive industry had bounced back, selling over 1 million new cars for the year, many thanks going out to the Federal Government’s business tax break.

The market was on track for another good year in 2011, but, Mother Nature had other plans. In the early months of the year a series of floods hit Australia and left Queensland, and even some parts of Victoria with a damage bill of over $1 billion, this directly related to new-car sales falling by 1.7% in January.

Before Australia even had a chance to mop up the mess an earthquake and tsunami hit the east coast of Japan in March; the impact of this tragedy is still being felt around the world today.

Car manufacturers’ from around the globe were in for some tough times ahead – parts shortage from suppliers, production issues, vehicle stock yards drying up, delays in shipments, threats of hazardous radiation, worker stoppages and no new stock to be seen from production lines. All these issues and others forced a number of major Japanese car manufacturers’ to shut down production at their plants whilst getting things back on track.

Toyota Japan’s shutdown alone affected more than 95,000 vehicle units, of which 60% were for shipment to export markets, including Australia. But it didn’t stop there, the effects also followed on to Toyota’s local plant here in Altona, Victoria; production was reduced 50% to manage available parts supply.

Source: Blue Flag Forecast & VFACTS - Sales Forecast includes Passanger, SUV, Light Commercial and Heavy Commercial Vehicles

So, will Australian’s buy 1 million cars in 2011?

With the huge 7% boost in sales in August in comparison to 2010, it’s possible but unlikely; our vehicle sales forecasts predict a sales drop of roughly 4% over last year’s figures, taking into account market trends, economic factors, as well as the lagging market due to delays. To put this into perspective, we should see a total of 999,314 new vehicles sold in 2011, with buyers expected to wait up to 5 months for a mainstream model to be delivered.