Car dealers expect April demand to plummet 60 per cent with buyers too scared to shop

*PHILIP KING*

MOTORING EDITOR

THE AUSTRALIAN

APRIL 3, 2020

Car sales felt the first cold shivers of coronavirus in March but dealers warn the worst is yet to come with buyers too scared to shop and April due to be “a bloodbath”.

Figures for March, which reflect sales several weeks before the strictest laws came into place, show an 18 per cent slowdown compared with last year but dealer reports show a 60 per cent plummet in sales since rules tightened.

Analysis of 70 dealers by the Victorian Automobile Chamber of Commerce, representing hundreds in the state, also shows service cancellations averaging 10 a day, parts sales down 19 per cent and finance down 77 per cent.

VACC member Nick Strauss, managing director of Berwick Motor Group, expects losses over the next three months to exceed $1m and says sales “are non-existent”.

“Most dealers have shut down their sales departments and service is starting to slow as well.”

“In April, it’s over. The pipeline is finished. The bloodbath will be April.”

In a letter to MPs, he says strict movement laws have scared potential buyers away.

“Even if we were to remain open, we have very few customers entering our dealerships, given the instruction by the government to stay home or face fines or even jail time.”

Mr Strauss said commercial automotive finance, which is less competitive than Australian bank rates, was another issue and unless governments intervened to help medium-sized businesses many faced closure.

‘In April, it’s over. The pipeline is finished. The bloodbath will be April.’

“After 25 years of running successful automotive dealerships, employing thousands of staff over the journey, I now find myself completely lost for answers.

“By next week I expect to have the majority of my staff stood down; 90 in total.”

It’s a similar picture in NSW, where “it’s disastrous” according to one regional dealer. He said it was too soon to gauge the coronavirus impact and March numbers were inflated by the Japanese end of financial year.

“That leads to huge bonusing from manufacturers, so there’s probably a fair few demos [demonstrator models] in it,” he said.

“And the coronavirus didn’t really have an effect on us until the last 10 days – then it stopped cold.”

“I normally do 70 cars a week – last week I did 15.”

He said hold-ups include the smallest SUV categories, which the March figures show as being up 7 per cent, while the Chinese badge MG is also bucking the trend.

The figures, released on Friday by the Federal Chamber of Automotive Industries, reveal hardest hit sectors were large cars, with demand down 55 compared with March 2019, the two smallest car segments and sportscars, where sales have plummeted 41 per cent.

The dealer said forward orders showed April would be “tragic” with sales dropping as much as 70 per cent and the downturn would continue for months.

The dealer said the main shoppers still in the market were cashed-up tradies and older people who had already retired.

With the exception of Sweden, where sales fell just 9 per cent in March, the Australian decline lags that in the US, where demand fell almost 40 per cent and the worst hit parts of Europe where March registrations declined 69 per cent in Spain, 72 per cent in France and 85 per cent in Italy.