Why June is the biggest month in car sales

Posted on June 7, 2024Comments Off on Why June is the biggest month in car sales

June is a massive month in the Australian new car market for buyers and dealers alike.

It has consistently claimed the crown for the biggest month of new car deliveries in Australia, with the only recent exception coming in the strange, supply constrained times of 2022 when March sales were slightly higher.

Over the last 10 years an average of 120,081 new cars have been registered and delivered to customers every June.

To put that in perspective, the next biggest month is March with an average of 99,885 deliveries over the same period.

It’s no coincidence this sales spike corresponds with the end of the financial year (EOFY). In fact, EOFY is the biggest driving force behind heightened June deliveries.

Month Average new car deliveries (2014-2023)
January 81,636
February 88,194
March 99,885
April 78,603
May 94,165
June 120,081
July 87,298
August 89,869
September 93,871
October 89,783
November 95,227
December 93,029

The instant asset write-off scheme is one factor behind this.

First introduced in 2011, the instant asset write-off scheme enables eligible businesses to claim an immediate deduction for the business portion of the cost of a commercial vehicle in the financial year the vehicle is first used.

In its current form the instant asset write-off is a program that benefits the cash flow of small businesses by providing an immediate depreciation sugar hit, rather than prolonging the depreciation process over a period of several years.

As such, in recent years eligible small businesses have rushed to purchase new commercial vehicles before June 30 (EOFY) to take advantage of the depreciation benefits. Utes and vans are particular popular on this front.

The instant asset write-off eligibility criteria and threshold have changed over time, and the most recent iteration of the program is less accessible to businesses than it was during the COVID pandemic.

As such, sales inflation caused by commercial demand may not match previous levels going forward.

“We get a lot of people who want to take advantage of the instant asset write off scheme,” Waverley Mazda general manager Ravi Emaduwage told CarExpert.

“People need to come in and pick up their car before June 30 so that it corresponds with this financial year, which is especially common for businesses buying the BT-50 and CX-60 as their company car.”

From a private buyer’s perspective, June is also a great time to acquire a new set of wheels because it’s when manufacturers and dealers offer the best incentives, according to Mr Emaduwage.

“End of financial year has traditionally always been a big month for car sales,” said Mr Emaduwage.

“January and June are our biggest months, with June coming out on top.

“Customers get the EOFY deals, a lot of manufacturers will put on new campaigns and try to increase sales.

“Most of the time the customer gets a benefit out of it by getting a car that’s reduced in price or comes with extra accessories.”

Some brands offer significant discounts on the sticker price of certain models. For example, Peugeot has slashed E-2008 GT prices by over $25,000 until June 30.

Businesses are also looked after. Two Mazda BT-50 variants have received reduced drive-away pricing nationwide for ABN holders. However, many of the factory bonuses are available only to private buyers.

Other manufacturers add value without altering prices by throwing in accessories and other extras.

Mitsubishi is looking to clear remaining model year 2023 Triton stock by fitting select models with a $2000 tow pack free of charge.

On the other hand, Mahindra is offering Scorpio buyers free servicing for the first three years of ownership.

Some deals even include a combination of price cuts and added extras.

You can find a full list of the new car deals that are currently available here.

It begs the question, what’s in it for the dealer and manufacturer?

As it turns out, quite a lot. As in most industries, end of financial year is the finish line for manufacturers and dealers from a performance measurement standpoint.

Sales volume, revenue, and profit/loss for the year are calculated based on data collated to the end of June in any given year for most brands, so a strong end to the financial year could be the difference between hitting or missing key sales objectives.

Offering discounts to customers on vehicles, both new and used, helps dealers to achieve that.

On a smaller scale, dealers and salespeople are also chasing sales to meet monthly average targets. Strong sales performance often leads to bonuses and promotions for people in the automotive industry, so it pays to go the extra mile in June.

At the manufacturer level, carmakers often complete a stocktake at the end of the financial year as part of their own performance assessments. Manufacturers will offer reduced wholesale prices on cars to dealers in the hope of shifting leftover stock before the financial year is out.

As a result the supply of new cars generally peaks during June, while generous deals simultaneously boost demand.

It’s a perfect storm. Buyers chase a bargain, and dealers rush to deliver fresh cars before the June 30 deadline passes.

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