BMW Australia predicts market slowdown

Local politics and overseas crises are driving away customers
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Luxury brand BMW believes consumer confidence in Australia is being dented by local politics and financial crises in Europe and North America – and, contrary to market leader Toyota’s view, predicts sales will slow in the second half of the year.

BMW sales have been following the trend of the Australian new-car market in the first seven months of 2011 – down by 5 per cent, tracing the market decline of 5.9 per cent.

But a tough two months have given the boss of BMW Australia, Phil Horton, a gloomy outlook for the rest of the year – and the rest of the new-car market. Fellow German maker Mercedes-Benz is down by 7.1 per cent and Audi would be down by 3 per cent if it weren’t for the A1 hatch which has given it a 9 per cent boost. Horton said sales figures for August will show BMW is down by 10 per cent compared with August last year.

“I think we’ll find that the whole market – not just BMW – is going to struggle,” he told Motoring.com.au at the launch of the BMW 1 Series M Coupe in Melbourne on the eve of the last day of trading for August.

“I think the market will be at least 5 per cent down, might be 10 per cent down. The Australian consumer isn’t exactly flying at the moment, the horns seem to be in.”

When asked if the Reserve Bank’s recent decision to hold-off an interest rate rise would help new-car sales, he said: “Holding interest rates? Reducing interest rates would be good. There’s so much weak news around. There’s a lot of political debate and … that’s not that constructive. There’s a lot of mud-slinging going on and I think that impacts on people’s confidence as well.

“Every time you pick up a newspaper, it’s all about the resources sector flying, everything else is left behind. Tourism is suffering from the strong currency, retail’s at its slowest in 30 years, [consumers are] buying on the internet. In some parts of the country [property values] are actually coming down. Some people are saying is this the best time to be buying a new car?”

Horton, an Englishman in the top job at BMW Australia for six months, said Australians seemed distracted by dramas overseas even though the local economy was sturdy.

“Don’t get me wrong, the market’s not falling off a cliff. [But] we’re into August where you’d expect momentum to start building again [after financial year deals in June] and then we get all this bad news from all over the world about European debt crisis and what America’s doing. Australia is so far away from everywhere else [but] the whole zeitgeist here seems to be ‘we don’t know what’s going to happen in politics or what this carbon tax thing is all about’.”

Despite the grim outlook, BMW believes it will finish the year ahead of Mercedes-Benz, Audi and Lexus in passenger car and SUV sales.

In the seven months to July, Mercedes-Benz leads the German trio with 9452 sales, ahead of BMW with 9024 and Audi with 8251. Lexus is a distant fourth with 3331.

“I think we’ll end the year ahead of our competition, but I’m not prepared to comment on what that means in terms of volume, because I think it’s going to be very tight,” Horton said. “The market’s running down at the moment. In the second half we were all looking for an upswing and we’re not going to see it. It’s going to be tough.”

He said 2012 would be a stronger year for BMW with the new 1 Series hatch (pictured) arriving later this year and 3 Series sedan early next year.

“The challenge for 2012 already is I don’t think anybody’s got a clue what’s going to happen with the market. If you’d asked me three months ago we were actually pretty bullish about 2012. But everything that’s happened in Oz and the rest of the world over the last three months, I couldn’t tell you whether the market’s going to be up, down or sideways.”

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