Page 24 - Australasian Paint & Panel Jul-Aug 2020

Used Car Opportunities
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JULY / AUGUST 2020
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LEFT: Not exactly a ‘pimp my ride’ accessory but RVE thought outside the box and used lockdown to design a Driver Bubble.
“We closed down the general uphol- stery-repair side of our business about five years ago, but we’ve opened that up again, because we’re seeing more work coming in on older cars already.
“The new normal is that you do what you can, you take anything that comes in and you try and come up with new ideas.”
There is plenty of speculation about what will happen in the Australian mar- ket, but the key themes seem to be that people will buy more second-hand cars; that people will drive more often because they fear public transport; and that road trips are set to return in a big way as peo- ple can’t go overseas, and don’t want to fly, even domestically.
Car sales plunged by almost 50 per cent in April - with one estimate sug- gesting Australians spent $1 billion less on new cars this year than they did in the same period in 2019.
Australian Automotive Dealer Associ- ation chief executive James Voortman said it was the lowest national monthly new car sales figure since 1994.
“The extent of this plunge in sales is pretty unprecedented in modern times, and it's going to have significant reper- cussions,” he said.
On the upside, JP Morgan has predict- ed that used-car prices could fall by more than 15 per cent, which would be even more than they fell during the GFC. The drop will be driven partly by a de-
cline in demand, but also by a flood of used cars coming on to the market from idle rental-car fleets.
There will, however, be plenty of cars on the road, according to Marion Terrill from the Grattan Institute. "A lot more people are going to prefer to drive, there’s just no doubt about it," she said.
The Australian Automotive After- market Association conducted a sur- vey of 300 workshops in May that found 83 per cent of them had ex- perienced declining revenue, de- spite the fact that many were le- gally allowed to remain open during lockdown.
The CEO of the AAAA, Stuart Char- ity, says confused messaging from var- ious levels of government didn’t help, but that businesses were now experi- encing a rapid bounce back as people started driving more again.
“People also have more time on their hands now, so they’re buying car-care products or working on that project car, and there’s also been a big bounce in four-wheel-drive accessories as people are getting their vehicles prepared to do a lot more road trips and camping holi- days,” Charity says.
The drop in new-car sales has also led to more people spending money on older vehicles - doing them up, buying accessories and even upgrading sus- pension, and he says that could clearly lead to opportunities.
“Collision workshops are geared up for this kind of work, they’ve got the hoists and so on, and after-market accessories, particularly in the four-wheel-drive space, have been a growth indus- try for a long time. When you add wheels and tyres, you’re looking at a $2 bil- lion turnover, so it’s signifi- cant,” Charity explains.
“The challenge for repairers is be- coming part of the distribution struc- tures for accessory businesses like ARB, but there are smaller, less-estab- lished retailers that might be looking for help with distribution.
“And the suspension industry is also huge, with companies like Ironman and Pedders and Lovells doing work that a well set-up collision repairer might be able to get in on.
After-market accessories, particularly in the
four-wheel-drive space, have been a growth industry for a long time.”
“It’s not just hard-core off-roaders who want that kind of work. The stand- ard suspension on a lot of these light commercial utes and four-wheel drives people are buying just doesn’t cut it once you start loading them up close to capacity, or hook up a boat or caravan, so a lot of people are looking for those kind of suspension upgrades.”
And in tough times, anything that might give your business a lift, or a spring in its bottom end, is surely worth exploring.