The Automotive industry in Australia continues to grow and remains a competitive, dynamic and expanding market, comprising a range of smaller industries, whose performances vary across the supply chain.

The main drivers of demand, population growth and business formation rates are on an upward trend. Primary demand determinants influence consumers' ability to purchase new vehicles, and include household discretionary income, interest rates and the price of vehicles. Over the past five years, the growing household discretionary income and lower interest rates have prompted vehicle sales to grow. Vehicle prices have fallen due to growth in lower cost imports, which has further strengthened demand in the new car market as vehicles have become more affordable.

As the industry evolves to meet these challenges, the Australian Government continues to invest to support the industry. Motor vehicle registrations have been growing rapidly in Queensland over the past five years and there has also been strong expansion in the state due to the mining and commodities sectors, which drive demand for vehicles. The same can be said for Western Australia, where there has been a boom in the demand for utility vehicles due to the rapid rise of mining activity during the period. While the brakes have been applied to the mining boom as it turns the corner from its investment phase to its production phase, the population growth in these states stemming from the investment phase is expected to keep each state's share of industry enterprises steady.

Automotive competition and market share

The market for motor vehicles is expected to remain highly competitive, with many brands competing to increase their market share. Profit margins are anticipated to increase slightly over the next five years, as industry players with higher margins capture a greater market share. Additionally, the anticipated appreciation of the Australian dollar will likely reduce the cost of purchases, which will further boost profit margins. However, directives from wholesalers (and their parent entities) to keep prices low are anticipated to limit the growth in dealers’ profit margins.

BDO’s automotive dealership advisory professionals understand the ever-changing market conditions and you can be confident that our knowledge and advice reflects the latest insights in the industry, to ensure you comply with regulations and help you achieve increased profitability and growth.

They also provide insights on current industry benchmarks, reports and audit, dealership tax planning as well as advisory reminders and requirements.