Right now is an interesting time in almost every industry, and automotive is no exception. Rules of the game, sales targets, and even entire business models are being re-thought, and this is having big impacts on consumer outcomes.
We boil down the three biggest trends in the automotive industry right now, and what it all means for someone thinking about buying a car:
1. Sales are down (like... really down)
It’s not groundbreaking news to hear that new car sales are on a downward trajectory in 2020 - in fact, new car sales have declined vs. the same month in the previous year for 26 consecutive months.
But 2020 has been a year like no other for car dealers, with new car sales plummeting 49% in April and other months following a similar trend
While this is bad news for car dealers who are fighting to stay afloat, it’s great news for consumers.
The huge reduction in sales is putting downward price pressure on new cars, meaning car dealers are more open to discounts and promotional offers than ever before.
2. Car yards are overstocked
No-one was expecting Coronavirus including car dealerships. This has meant that dealerships across Australia now have too much stock than they were able to sell - and they are very keen to get it off their yard as quickly as possible.
This is because of a concept called “floor plan financing” - a funding service that offers dealerships a way to to purchase inventory without needing the cash up front. In fact it’s very rare for dealers to pay for cars in cash due to the huge outlay that would be required.
This means that dealerships are paying interest on the vehicles in their inventory, giving them even more incentive to get slower moving stock off their yards (which means further discounts for consumers).
3. End of Financial Year is here (EOFY)
You’ve probably heard of EOFY across all kinds of industries - but the data shows that deals are particularly good in the automotive industry.
In fact in 2018, June sales were almost 20% higher than the second biggest sales month.
This is largely driven by car dealer networks who spend big to attract a greater number of customers in order to hit critical end of year sales targets. Given the poor sales in 2020 so far, dealers will be especially keen this June to have a final push towards their sales targets before EOFY - meaning larger discounts, free extras, and a willingness to negotiate more than any other month.
So what does this all mean for Australian car buyers?
The compounded impact of Coronavirus and the end of a rollercoaster financial year makes right now a great time for automotive consumers, with dealerships more eager to sell their cars and more open to price negotiation than ever before - so you could get a great deal on a new car.
There’s no better way to negotiate your new car purchase than coming to a dealership with finance pre-approved (even if you don’t know what car you’re buying yet!). And if you’re not comfortable negotiating directly with the dealership, you can even use our car buying service to help find your new car at a discount for you.