2025 VFACTS: Subdued Automotive Market Outlook Despite Record 2024 New Car Sales

The Australian automotive industry achieved its highest annual sales record in 2024, with 1,220,607 vehicles sold—a 0.3% increase over 2023. However, the December VFACTS data reveals underlying concerns that have tempered industry enthusiasm for the new year. A total of 95,895 vehicles were sold in December 2024, a 2.7% decline from the same month in 2023, illustrating ongoing challenges stemming from economic pressures and evolving consumer preferences.

The second half of the year showed a concerning trend with sales in the Private segment falling to very low levels as interest rates and general cost of living pressures impacted Australian families.

Tony Weber, FCAI Chief Executive

Key Trends in December 2024 New Vehicle Sales

• Declining Private Segment: The second half of 2024 showed weakening momentum, with the private sales segment experiencing substantial declines that could be due in part to rising interest rates and cost-of-living pressures. Passenger vehicle sales fell by 13.8% compared to December 2023.
• SUV and Light Commercial Dominance: SUVs continue to dominate the market, with a 10.7% year-on-year increase in sales during December. However, light commercial vehicle sales fell sharply, down 22.7%, highlighting a potential shift in fleet and business purchasing behaviour.
• Electric Vehicle Challenges: Battery electric vehicle (BEV) sales underperformed expectations, echoing trends observed in global markets. While hybrid and plug-in hybrid vehicles gained traction, accounting for 14.1% and 1.9% of the market respectively, BEVs face hurdles in infrastructure and affordability.

Top-Selling Car Models and Brands in December 2024

Toyota retained its position as Australia’s top-selling brand, commanding 19.8% of the market share for the year. The Toyota RAV4 led December sales with 5,119 units sold, a remarkable 133.5% increase from December 2023. Ford’s Ranger and Toyota’s HiLux, typically dominant in the light commercial segment, saw significant declines of 42.2% and 35.2%, respectively, highlighting a notable shift in consumer behavior. Other models making waves included:

• Ford Everest: Sales grew by 65.5% year-on-year, underscoring its off-road appeal and practicality in the SUV segment.
• Nissan X-Trail: With a 123% increase, it demonstrated renewed consumer interest in the model.
• Haval Jolion: A 56.1% sales increase from December 2023 cemented its position in the competitive compact SUV segment.

Among brands, Ford surpassed Mazda for the number two spot, reflecting a strong performance in the SUV segment despite setbacks in light commercial sales. Kia also gained market share, climbing to fourth place, while Mitsubishi solidified its fifth position with year-end sales of 74,547 units.

State and Territory Results

Sales trends varied across Australia. Western Australia stood out with a 9.2% increase in December sales compared to 2023, while all other states and territories experienced declines, ranging from 1.7% in New South Wales to 13.5% in South Australia. Economic pressures and shifting buyer preferences played significant roles in these regional disparities.

Implications of the New Vehicle Efficiency Standard (NVES)

The introduction of the NVES on January 1, 2025, adds another layer of complexity to the industry’s outlook. Manufacturers face potential penalties for not meeting emissions targets, likely driving up vehicle prices. While automakers are expanding their offerings of low-emission vehicles, consumer hesitation—driven by affordability concerns and limited charging infrastructure—poses a significant challenge to the transition.

Tony Weber, Chief Executive of the FCAI, emphasised the importance of government support, including investments in EV charging infrastructure and policy incentives such as the extension of FBT exemptions for plug-in hybrids beyond April 2025. Without such measures, achieving emissions reduction goals may remain out of reach.

Outlook for 2025

Although 2024 ended on a high note with record sales, the industry faces headwinds in 2025. Cost-of-living pressures and the introduction of the NVES are expected to weigh on consumer demand. However, opportunities exist for brands willing to innovate and adapt to changing market conditions. Toyota, Ford, and emerging players like GWM and MG are well-positioned to capture market share by leveraging competitive pricing and diversified product offerings.

The coming months will test the resilience of Australia’s automotive industry as it navigates these challenges while striving to meet consumer needs and regulatory demands.