Market Overview The New Car segment is starting to struggle as it comes to grips with the new lending legislation. New car dealers are suggesting 10-20% of loans are now being denied which would have sailed through previously, resulting in cancelled orders. It’s seems like consumers are quickly losing confidence as the housing market slows, with home equity dwindling away. Recent reports highlighted that the only housing market that has continued to grow in recent times was Tasmania and this is the only new car market that performed better in October 2018 than October 2017. From Vfacts: "Sales in October fell across all states and territories compared to October 2017, other than Tasmania, which held firm with a 0.3% increase. The remaining states and territories fell as follows: New South Wales (-9.2%), Victoria (-4.2%), Queensland (-2.7%), Western Australia (-1.7%), South Australia (-5.1%), the ACT (-2.1%) and the Northern Territory (-4.7%). The decline was again most pronounced in sales to private purchasers, which were down by 12% across all vehicle types for the month compared to October 2017. This included falls in passenger sales to private buyers of 24.1%, whilst private SUVs sales were down by 3.2% and light commercial sales down by 4.3%. Year to date sales toprivate buyers are now down 6.6% compared to the same period in 2017." (Source: https://www.fcai.com.au/news/index/index/article/548) The below tables really highlight the challenges Ford and Holden face in terms of annual sales volumes, allowing the likes of Mitsubishi, Honda and Kia to increase market share: Sales Results: Report for the month Year to Date Year to date Month of Oct 2018 YTD Oct 18 Oct 17 Oct 18 Standings Marque Volume Share Volume Share Volume Share 1 ▲ Toyota 182,799 18.8% 180,681 18.3% 17,811 19.6% 2 ▼ Mazda 94,246 9.7% 97,917 9.9% 8,172 9.0% 3 ▼ Hyundai 80,552 8.3% 82,050 8.3% 7,432 8.2% 4 ▲ Mitsubishi 70,685 7.3% 64,957 6.6% 6,217 6.9% 5 ▼ Ford 58,332 6.0% 66,250 6.7% 5,326 5.9% 6 ▼ Holden 50,804 5.2% 70,172 7.1% 5,256 5.8% 7 ▲ Kia 49,957 5.1% 46,425 4.7% 4,583 5.1% 8 ▲ Nissan 47,835 4.9% 46,936 4.8% 4,241 4.7% 9 ▲ Volkswagen 47,616 4.9% 47,504 4.8% 4,835 5.3% 10 ▲ Honda 43,604 4.5% 37,311 3.8% 3,067 3.4% Certainly NSW seems to have corrected more than any other state month on month with regards to new car sales. Top 10 individual models (by sales volume) State/Territory results (by sales volume) Rank Vehicle Oct - 18 Oct - 17 % Diff. State / Territory Oct - 18 Oct - 17 % Diff. 1 Toyota Hilux 4401 3812 15.5% ACT 1,148 1,448 -2.1% 2 Ford Ranger 3511 3074 14.2% NSW 28,575 31,454 -9.2% 3 Toyota Corolla 2663 3088 -13.8% NT 709 744 -4.7% 4 Mazda3 2094 1962 6.7% QLD 17,375 17,860 -2.7% 5 Hyundai i30 2049 3983 -48.6% SA 5,533 5,831 -5.1% 6 Mazda Cx-5 2000 2173 -8.0% TAS 1,876 1,870 -0.3% 7 Toyota Landcruiser 1970 2019 -2.4% VIC 26,914 28,098 -4.2% 8 Subaru Forester 1792 987 81.6% 9 Mitsubishi ASX 1739 1542 12.8% WA 8,318 8,458 -1.7% 10 Mitsubishi Triton 1650 1857 -11.1% Total 90,718 95,763 -5.3% The big question is how this will affect the used car market. Our market has certainly strengthened over the past quarter. The appetite of Toyota product is incredibly strong with a recent Big Toyota Auction resulting in 100% clearance with all vehicles exceeding reserve under the hammer - quite extraordinary. We’ve seen previously that softer new car markets result in stronger used car markets. However, we are also dealing with a dealer market that is going through some major changes with huge reductions in finance margins, resulting in them needing to make a much higher margin from the sale of the vehicle rather than rely largely on finance commissions. This means dealers will most likely want to pay less for vehicles. On the flip side, if consumers can’t get approval for say a $35,000 loan but now are restricted to $20,000, this will help drive competition in the used market as they opt for used cars either directly from Pickles or from dealers who source the majority of their vehicles from wholesale auctions.