According to a new report by Savvy, Australian car sales have surged 33% year on year (October 2020 to 2021) despite a world downturn in car sales amid ongoing COVID-19 uncertainty and a semiconductor shortage.

Using the latest VFACTS and data from the Australian Federal Chamber of Automotive Industries as well as world statistics, global new car sales have decreased by 14%, while automotive sales in the US have dipped by 15.83% (2019 vs 2020) and UK sales have slumped by 27% (2019 vs 2020.)

Australians have a healthy appetite for cars, with 20.1 million registered vehicles for a population of 25 million, of which at least a third are too young or old to drive. 

SUVs have remained the most popular type of vehicle, outselling other passenger vehicles by a ratio of four to one. Passenger vehicle sales increased by 17.5% year on year. As for the adoption of electric vehicles (EVs), only 0.78% of all vehicle sales in Australia were electric, although Savvy reports that brands like Tesla do not report sales figures to VFACTS or the FCAI as they are not strictly a car company.

Hurry Up and Wait
Anecdotal evidence suggests that car loan applications and orders for vehicles have remained strong throughout the pandemic, despite wait times of up to seven months or more.

Dealers "don't have any trouble selling cars" says Savvy Managing Director Bill Tsouvalas as "too many people want them. Buyers are taking new car loans as well."

"Australia's economy, despite extended lockdowns in New South Wales and Victoria, has come out very well," he says. "Add that to record low interest rates, government stimulus, and business loan guarantees, you have people that would rather take advantage of this perfect buyer's market now than wait for the semiconductor shortage to clear up."

Semiconductors, critical components in electronic devices, have been in short supply for the past two years due to factory shutdowns, supply chain bottlenecks, and huge increases in the cost of freight.

Residents in government declared "COVID hotspots" have been eligible for a $750 per week disaster payment while businesses can access instant asset write-offs worth up to $30,000. Some states and jurisdictions can also avail themselves of government-guaranteed business loans.

Where the Sales Are
Queensland and South Australia, both states that have been relatively open over 2020 and 2021 posted the highest growth in sales at 2.3% - the same with the ACT. NSW still saw 2% of sales growth, with WA slightly behind on 1.6%. Unsurprisingly, the lowest growth was seen in Victoria (0.7%).

SUV sales are also surging due to increased manufacturer advertising and marketing. "Car manufacturers are pushing SUVs because they're cheap to produce. They are boxy and can be dressed up or down depending on the market while keeping margins high. But oddly, they also occupy this niche aspirational market," Tsouvalas says. "The sedan and saloon car are old hat. If you want to be upwardly mobile, SUVs are the way you flaunt it."

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