There are many reasons why people go for luxury car brands when purchasing a vehicle for their daily commute. Apart from the obvious comfort these cars provide, many believe them to be a great investment since their resale price is very impressive.
However, when alternative investments become available offering a higher return or greater value, sales for these luxury car brands plummet as a result. Something similar has happened with Audi in Australia, as the company has linked its plummeting sales this season to a softening housing market.
When alternative investments become available offering a higher return or greater value, sales for luxury car brands plummet as a result.
It’s not just Audi experiencing a decline in sales. Other luxury car brands such as BMW and Mercedes-Benz, which are also of German-origin like Audi, have also seen a fall in their sales figures this season, although they did not experience as severe a decline as Audi.
Specifically, if sales figures of this August are compared with August last year, Mercedes-Benz experienced a decline of 11.5%, BMW witnessed a fall in sales figures of 12.2%, and Audi took the lead in the extent of falling sales with a significant decline of 25.8%. Year-on-year analysis shows the car companies experiencing an overall decline in their selling prowess, with Mercedes-Benz showing a decline of 7.5%, BMW 3.8%, and Audi 8.5% in their current year’s selling performance as compared to last year.
Not All Car Companies Have Declining Sales
While Audi may have blamed the housing market for its disappointing performance this season, other car brands seem to be doing fairly well. According to reports, car brands such as Toyota, Honda, and KIA among other mainstream car brands have actually shown improving sales performance in the same period.
Hyundai together with Mazda were the only two brands in the mainstream category to witness a decline in sales, however that was only less than 1% as well which is still much better than how our favorite German car brands have performed.
The Contracting Market For Luxury Cars
According to the Managing Director of Audi in Australia, Paul Sansom, when there is an uncertain environment in the economy, combined with changes in trends in the housing market, sales of luxury brands including cars are always impacted.
Sansom has described the market as tough, indicating that there exists a correlation between the prices in the housing market with luxury cars as the two then become substitutes. With prices in the Australian housing market going down, it’s natural for sales of luxury car brands such as Audi to go down as well, as more people are saving up and investing in the housing market.
There exists a correlation between the prices in the housing market with luxury cars.
Apart from the impact caused by changes in the housing market, Sansom is also of the view that the recent rise in interest rates and the existent instability in the government have bruised customer confidence, prompting them to save their money in bank accounts or in other liquid forms instead of investing in assets such as cars. However, Sansom also expect the trend to reverse in the future.
Sansom says that Audi as a business is experiencing great health, as the business finds itself poised and fully prepared to launch new products in the near future. The company is focusing on the SUV sector with its new collection, which will be a great offer for customers seeking greater value with lesser investment cost.
This, combined with a well-integrated network of dealers in the country, may enable Audi to take advantage of the uptrend in the market expected in the coming years.
When Will The Market Change?
The trend in the market at the moment is not going to slow down anytime soon, and according to experts the current decline in the car market may well continue for the next couple of years till 2020. Considering historical data and trends, it is possible that this year’s trend will continue in the next year as well.
After that, the market is expected to turnaround, and luxury car brands such as Audi, Mercedes-Benz, and BMW are all expected to witness growth in the luxury car market once again.
Considering historical data and trends, it is possible that this year’s trend will continue in the next year as well.
However, this theory does not seem to apply on a few other luxury car brands such as Ferrari or Lamborghini, as these car companies saw an improvement in their sales figures of around 22.2% and 14.1%, respectively. The reason behind that is uncertain, but it does hint at the fact that the market will rebound in due time.