Now may be a great time to buy a new car, with Toyota launching a price war in the small car segment.
Toyota has today released its 11th version of the ubiquitous Corolla, with the entry level Corolla Ascent hatch selling for $19,990, the same price it was 11 years ago, and with many more features. That’s likely to throw the cat amongst the pigeons, forcing manufacturers of other small cars to reduce their prices, in order to compete against the new interloper. Capped price servicing is also a feature of the new car, with a set price of $130 for up to six scheduled logbook services.
Increasing demand for more fuel efficient and less carbon polluting vehicles has seen sales of alternative fuel vehicles grow by 191% in September compared to last year, spurring even more competition.
At the same time, sales of SUVs (Sports Utility Vehicles) are continuing to grow strongly, while sales of the average family sedan have fallen dramatically. SUVs accounted for 29% of all new car sales so far this year. On the back of the strong SUV demand, ARB Corporation (ASX: ARP), which sells mainly 4WD accessories, including bull bars, tow bars and canopies, has seen its revenues rise by around 14% on average every year since 1998.
The days of Australians buying mostly large family sedans appears to be well and truly over, evidenced by declining sales of Ford Falcons and Holden Commodores. Medium passenger vehicles and sports cars have also continued to rise, up 12% and 54% respectively so far this year, compared to last year.
Competition is also likely to increase as up to 10 Chinese car manufacturers are looking to sell cars in Australia. That could increase margin pressure on motor vehicle dealers such as Automotive Holdings Group (ASX: AHE) and AP Eagers Limited (ASX: APE).
For motor accessories retailers, Super Retail Group (ASX: SUL) with its Super Cheap Auto stores and Metcash Limited (ASX: MTS) with its recent buy into Autobarn stores, more new cars should be good for their businesses. That should see increasing demand for after-market products suitable for all brands.
Any way you look at it, more competition is good for Australians, and now might be a good time to go shopping.
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