The RedBook Insider: Retail Offers on the Way Back

Nothing hints more to a return to ‘normal’ trading conditions than brands advertising special retail offers to entice buyers into the market. While not all offers represent genuine savings, they are a signal to the market that brands are restocked and wanting to increase the pace of new vehicle sales.

Respected US-based publication, Automotive News recently stated “…the world’s largest auto market [China] is in the midst of a heated price war” stating that “transaction price drops of more than ¥10,000 [~AUD $2150], …up from 12% in February and versus 6% in March last year”.

What was arguably triggered by US EV giant Tesla, after removal of Chinese government EV subsidies, has now spread beyond EVs into ICE powertrains. Indeed, many OEMs in China are now scrambling to maintain relativity between powertrains, with such examples cited as the Toyota bZ4X electric SUV being discounted as much as 30% since December 2022.

So, what does this mean for us locally in Australia? The team at RedBook have been capturing this information for many years now, and whilst nowhere near as dramatic as what is playing out in China, what is clearly apparent of late is the return of big brands to the retail offer space.

During the depths of the pandemic, circa 2021, there wasn’t an offer to be found openly advertised. Most manufacturers struggled to fill existing order banks and simply had no need to drive additional enquiry or lift sales run rates. As we gradually emerged from Covid restrictions in late 2021, so did some brands, initially led by Chinese marques, but closely followed by better known brands such as Mitsubishi and Isuzu Ute. The use of brand-tail messaging (a combination of brand & retail offers) effectively assisted these brands in maintaining awareness levels and driving further order enquiry, resulting in strong gains in market share in relevant segments.

Source: RedBook & OEMs

As pricing and future valuation specialists, RedBook doesn’t see the return of retail offers themselves as a negative, it is more the nature, level and volume that can influence a vehicle’s future retained or current used value. With Q1 2023 firmly in the rear-view mirror, whilst not industry wide, more and more brands are re-establishing a marketing presence, increasing their retail offer messaging. It is now seemingly evident we will see a “new type” of normalisation in vehicle retailing activity from mid-2023 onwards, somewhat bizarrely, also continuing to experience lengthy waits for these very same vehicles.