New car prices are expected to rise through 2024 despite showroom demand falling through the final quarter of 2023 and potentially facing a double-digit downturn this year.
The forecast comes from the body representing Australia’s 60-plus car brands, the Federal Chamber of Automotive Industries (FCAI) in Canberra, but it has resisted providing any exact numbers.
Even so, the FCAI has identified a number of competitive upward pressures on pricing through the coming year, from extra brands to additional battery-electric arrivals.
It has also confirmed the impact of new technology, in safety systems and electrification, on buyers’ wallets.
“As the industry evolves, brands are likely to continue leveraging technological advancements and unique features to stand out in a competitive market, impacting new car prices,” FCAI chief executive Tony Weber told CarExpert.
“The increase in prices is not solely driven by manufacturing and shipping costs but is also influenced by the incorporation of the latest technological advancements in vehicles. This includes developments in engine and battery technology, environmental and safety systems, and connectivity features.
“The Australian automotive industry is dynamic, and pricing adjustments are often a reflection of ongoing innovation and improvement in vehicle offerings.”
As an example, the technology needed to achieve a five-star ANCAP safety score has all but killed sub-$20,000 cars in Australia.
There have been signs of downward pressure on prices in recent months, with the return of discounting and deals by some companies, and the FCAI sees some signs for optimism.
“The competitive landscape of Australia’s automotive market plays a crucial role in shaping pricing dynamics. The presence of multiple brands and new entrants vying for market share intensifies competition, and pricing strategies are influenced by the need to differentiate products and attract consumers,” Mr Weber said.
“As the industry evolves, brands are likely to continue leveraging technological advancements and unique features to stand out in a competitive market, impacting new car prices.”
Mr Weber highlighted the impact of new arrivals from China.
“The competition arising from new entrants, particularly in the Battery Electric Vehicle (BEV) segment, has contributed to a more competitive landscape,” he said.
“As brands in China and around the world continue to expand their presence and introduce new models, consumers are presented with additional options, fostering competition that can mitigate upward price pressures. However, the overall impact on prices is subject to various market dynamics and the specific strategies adopted by individual brands.”
The FCAI said it’s continuing to pressure the government in Canberra over everything from import duties to the highly unpopular Luxury Car Tax (LCT).
“While significant progress on trade deals benefiting Australian consumers may be unlikely in 2024, collaborative efforts between the FCAI and the Government persist,” said Mr Weber.
“The FCAI remains engaged in advocating for the interests of consumers, addressing issues such as fees and charges, including the removal of the Luxury Car Tax and tariffs.
“Additionally, discussions surrounding the potential implementation of a future road user charging system are ongoing, with the aim of ensuring a fair and efficient structure that aligns with the evolving automotive landscape.”