Is Volkswagen the canary in the coal mine?
The German automotive giant, not long removed from its aspirations of taking on Toyota as the world's largest car maker, is in the midst of a massive overhaul. While nothing has been officially confirmed, reports indicate that as many as 100,000 jobs, four factories and up to 75 models across the Volkswagen Group could go as the operation attempts to right-size.
Volkswagen sales are down nearly 20 per cent year-to-date to July in Australia, Cupra has lost over 30 per cent of its sales, Audi is down nearly 15 per cent and Skoda has dropped three per cent. Even Porsche, long seen as the 'rock' of the Group is hurting, down nearly 30 per cent.
But Volkswagen isn't alone, there is a growing sense the automotive industry, both in Australia and globally, is on the verge of a major transition. The influx of new brands from China shows no sign of slowing down, there are two more - Lepas and Forthing - set to launch in Australia in August.
The reality is, the new car market around the world, but particularly in Australia, is only so big. Adding another 10-20 new brands won't suddenly increase the amount of people buying cars as dramatically. Especially as data shows the number of driving age people in Australia without a licence is growing as more and more people prefer public transport or other alternatives.
But putting the global impact aside and focusing on Australia, it is becoming clear that 2026 will likely be a turning point for the local market. Like I said, Volkswagen Group isn't alone in suffering a decline in sales.
A look at the July sales data shows sales drops this year for Toyota, Ford, Mazda, Mitsubishi, Isuzu, Subaru, Nissan, BMW, Mercedes-Benz and the list goes on. There are some 'legacy' brands pushing against the trend, namely Kia and Honda, but the real winners this year are BYD, GWM, Chery, MG, Geely, Omoda-Jaecoo and Zeekr.
It doesn't take an industry analyst to recognise the pattern. As these new Chinese brands have made an impact on the sales charts - all of those listed are within the top 20 selling brands - those sales have to come from somewhere.
As I've written before, the new car sales 'pie' is only so big so everyone is going to have to get comfortable having a different sized slice of pie compared to previous years. The impact of cost-of-living pressures and the on-going uncertainty around fuel prices has played a major part in the shake-up too, but the idea that things will go back to 'normal' in 2027 and beyond, with the Chinese brands fading into the background is ridiculous.
The likes of BYD, GWM and Chery are now likely permanent fixtures amongst the best-selling brands, and that will mean every other brand will need to adapt to this new world order. A sales drop is not what any brand wants, but for most it's something they will need to accept for both this year and moving world order.
