As we approach the end of the financial year, dealers run EOFY car sales, and yes, the traditional sales are happening this year. The more significant challenge for car buyers is stock shortages. There are several reasons why buying the car you want is more challenging than in the past. But before we dive into the causes, here is a quick update on the market to help explain why.
Car Market Update
We saw a record number of 100,809 new vehicle sales recorded ( source: FCAI), surpassing the March record of 100,005. The FCAI figures show new car sales increased by 68% in May 2021 versus May 2020.
These figures indicate confidence in the national economy, and we expect to see sales growth continue.
The 4×4 market continues to dominate sales as people look to either utilise a 4 x4 vehicle for employment purposes and take road trip holidays rather than overseas travel.
These are the TOP 5 cars with the greatest increases so far in 2021:
- MG ZS (+5,698 units)
- Ranger 4X4 (+5,383 units)
- Hilux 4X4 (+5,217 units)
- Landcruiser Wagon (+5,098 units)
- RAV4 (+4,946 units)
Used car prices for the top traded vehicles continues to be up, Toyota Landcruiser Prado (+4.1%) seeing the most significant increase. ( Source: Datium Insights).
It doesn’t matter which state you live in; all states saw substantial car sale increases in May 2021 compared to May 2020. (Source: Datium Insights)
Reasons For Stock Shortages
1. Supply v Demand
There are now more buyers in Australia than cars to deliver in both the new and used market. Demand for vehicles has outpaced supply. COVID directly impacted supply chains around the world. Manufacturers initially shut car factories or slowed production to manage the spread of the virus. Production is now picking up but is still behind pre-COVID levels and creates many of the shortages we see.
2. Semiconductor Chip Shortage
The ongoing semiconductor chip shortage is the other major cause. Why is this such a big deal?
Semiconductor chips are essential components of all new vehicles for infotainment systems and parts such as power steering and brakes. Experts say a car could have hundreds of semiconductors, if not more, depending on the vehicle and its options. Higher-priced vehicles with advanced safety and infotainment systems have far more than a base model, including different types of chips. There are up to 1,400 chips in a typical vehicle today! This is why they are critical to the production of a car.
Red Plum Savings
Increased demand and a global semiconductor shortage have exhausted much of the new car stock locally. We are seeing delays for a new car stretching to many months. The top 10 brands are affected, but it is not an impossible task depending on the make and model. The flow-on has meant discounting by dealers is less.
Although discounting is not as strong for EOFY car sales this year, we continue to get our customers good deals. Generally better than they can negotiate themselves – Monthly Top 5 Car Savings.
EOFY Car Sales
Overall we see the most significant problems for car buyers during EOFY car sales and into next year as;
- receiving the correct information about wait times
- dealing with the frustration of following up and managing delivery times
Our network allows us to search a much larger pool of stock than an individual, resulting in a greater chance of finding a car and the best pricing. Plus, we manage the frustrating follow-up process with the dealer.
Toyota recently found themselves handling customers’ negative feedback who were upset that Toyota was not allocating cars on a “first come, first serve” basis. Unfortunately, it is tough for individuals to get access to the allocation of dealer stock as we can and put themselves at the head of the queue.
Traditionally June and December are an excellent time to buy a new car as dealers prepare for new stock arriving in the new financial and new calendar year. Read a blog we wrote previously. The parent company also offers dealers incentives to move old stock. The goal is minimal old stock and increased cash resulting in greater discounts during EOFY or pre-Christmas car sales. EOFY is also an opportunity to take advantage of the instant asset write-off for buyers operating businesses before the new financial year starts.
How can we help?
Our knowledge, understanding and purchasing power within the industry gives us the advantage, which we can use to assist buyers in having a better car buying experience during EOFY car sales and beyond!
If you are looking for a new car, we would love to help. Contact us