√End Of Financial Year deals are dead, says industry analyst

June is historically the biggest month for new-car sales as buyers take advantage of End Of Financial Year deals. But an ongoing shortage of stock has put a temporary hold on EOFY sales for motor vehicles.

It’s the end of the road for End Of Financial Year deals on new motor vehicles – at least for the time being – a leading car company executive has claimed.

And, in the absence of any EOFY new-car deals in the market currently, there appears to be consensus across the auto industry.

When asked if the pandemic and ongoing severe stock shortages had brought an end of End Of Financial Year (EOFY) deals, the boss of Kia Australia Damien Meredith said: “I don’t think you will see one for a long time.”

The average waiting time for new motor vehicles ranges from three to 12 months; in extreme cases some cars have delays of two years or more.

The restriction on vehicle availability means new-car buyers are not only having to wait – but they are paying full price.

In the decade leading up to the pandemic, car companies and car dealers were overstocked.

Under enormous pressure to sell cars, the discounts were massive and profit margins were slim. Now the opposite is true.

“I don’t think we’ll ever get to a stage where there are 60,000 cars on grass (the industry term for ‘in storage’) from an industry point of view,” said Mr Meredith.

“Rightfully or wrongfully, the industry has learned that you can get (new cars) in and out more efficiently.

“When we can get (stock), it’s not hanging around, the cars are in and out. I can’t see anything happening in regards to sale events for quite a few years.”

When asked if the car industry in Australia would ever be overstocked again, Mr Meredith repeated his earlier comment: “I don’t think we will ever get back to a stage where the industry will have 60,000 cars on grass, I think those days are gone.”

When asked if the car industry was deliberately restricting vehicle supply to boost profits, Mr Meredith said: “I don’t think the car industry restricted supply because they thought this was going to be the end result. Supply was restricted because of things outside their influence, but it’s worked in their favour.”

The automotive industry veteran said the pandemic has shown global car companies that a scarcity of vehicles boosts their bottom line.

“I think what’s changed as much as the supply-chain (restrictions) is the mentality of car company head offices around the world,” said Mr Meredith. “Now they’re focusing on the profit aspect of (the business) rather than the volume aspect.

“The world’s changed, the way we’re doing business is changing,” he said. “The focus isn’t on smashing 10,000 cars into the market anymore, the focus is on what do we need to do to get a return on investment.”

When asked if discounting and sharp prices would ever return, Mr Meredith said: “Over the next 12 to 18 months … supply will get closer to demand. Demand will drop off, supply will go up, so pricing will look after itself.”

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