Second Quarter Report for 2021

Quarterly Report Q2 2021

Another quarter of COVID, lockdowns, and markets continuing to fight any downturn.  Booming truck and car sales can only be hindered by production issues due to the semiconductor shortages. Take a look at what made this quarter’s highlights across all our sectors:

• The new road transport market has been disrupted in the second quarter due to global parts shortages and delivery delays caused predominantly by factory closures in Asia and China
• Caterpillar sales in Asia / Pacific are up 19% for resources and 8% for construction on the same period last year
• Australian agriculture is in very good shape with seasonal conditions and strong commodity prices driving the market
• May saw 100,809 new vehicles which is the second-best May result on record
• Aviation has had a standout quarter with auction achieving 100% clearance of all 38 aircraft, parts, tools, IT, and administration items
• Classic and collectible cars have become a dominant feature in many recent sales, gaining significant media attention
• Within Q2, 16 Coaches were presented to auction as part of a Major Liquidation, buyer participation and enquiries were strong throughout the sale campaign.

Road Transport

Road Transport

New Road Transport Market

The new road transport market has been disrupted in the second quarter due to global parts shortages.  

The reason for the market disruption in the second quarter is a substantial shortage in key parts and delays on deliveries from overseas markets, particularly in Asia, Europe and the US, where a large part of Australia’s road transport is produced. Local manufacturers are also affected by the global supply issues. Despite shortages and delays, there is still a great demand for new road transport vehicles, proving difficult for the Australian manufacturers and importers to satisfy. Declining inventories and a steady demand for new vehicles have pushed prices on dealer lots sky-high.  

The COVID-caused recession in 2020 lead car and truck manufacturers to cut back their production. When the demand for new cars and trucks began to rise late in 2020, automakers found themselves unable to procure sufficient volumes of key materials, particularly semi-conductors, forcing them to curtail production. Electronic semi-conductors are the “chips” that make up the plethora of electronic control units in modern vehicles. These ECUs control engine, transmission, braking, heating, and cooling systems in cars and trucks. Without these, modern vehicles cannot operate. 90% of the world’s semi-conductors are produced in Asia and approximately 60% in China. The disruption of supply caused by factory closures in this region significantly contributes to the supply shortages and delays.   

Supply chain issues have had a greater effect on the heavy-duty segment in the new road transport market.  The global supply and import constraints are affecting the production of large trucks from manufacturers such as Kenworth, Mack, & Volvo. Meanwhile, the supply of light and medium-duty trucks which are predominantly sourced from Japan has not experienced the same shortage, as the supply of trucks out of Japan appears to be solid.   

There is hope for the market to improve soon. COVID-19 vaccinations are reducing the effects of the pandemic on global workforces, with many companies returning to, or close to, full manufacturing capacity. The combination of all these factors will hopefully eventuate in global manufacturing and supply channels returning to pre-COVID capacities in the second half of 2021, resulting in a return of truck manufacturing capacity over the same period. 

The Truck Industry Council (TIC) advises if you are thinking of purchasing a new truck, or two now would be a good time to place that order. Not only are there significant financial incentives still on offer by the Australian government through to mid-2022, but manufacturing and supply of trucks should also witness a resurgence over that same period.

COVID may be responsible for the supply chain issues but it also takes the credit for a prosperous June with 4741 units and our year-to-date figure of 19,920, just 50 short of the best-ever year since 2018. 

While COVID has been a disaster for some, it has been a booming time for others. Plus the Government’s incentive programs have brought forward many sales to add to the bumper quarter. Demand is high even though supply is short. 

Again, Isuzu led the charge with 1085 sales or 22.9% of the market. Hino was second with a record month for the company at 761 with Fuso third posting another record of 568 sales.

In the heavy-duty market, Kenworth had an incredible June with 325 sales while Volvo slid into second with 146 sales just ahead of a fast-finishing Mercedes-Benz with 139. Scania came in fourth with 122. 

Scania’s YTD sales are notable as it is the highest half-year sales figure for the company to date, prompting a spokesman to say: Scania’s 576 deliveries is our highest first-half result ever. It wasn’t that long ago that 576 would have been a respectable full-year figure for us. 

The big three Japanese manufacturers dominated the Medium sector but with Hino this time surpassing Isuzu with 293 sales. Fuso was third with 182 units moved. 

Light Duty was back to Isuzu with an impressive 681 sales for 42 percent of the market. The second was again Hino with 389 with Fuso recording a still-impressive 298. 

Secondary Road Transport Market

Good quality, late model prime movers have been keenly sought after in the auction and secondary markets. 

This was reflected in New South Wales’ recent prices skyrocketing for second-hand Kenworth vehicles. The hype over the secondary market was also evident in Queensland with the recent sale of a 2016 Volvo FH16 Prime Over showing 686,955 km for $158,600 and a 2017 Volvo FH 540 Prime Mover showing 736,589 km for $140,300, representing around 100% of retail.

The volume supply of second-hand heavy-duty, medium-duty, and light-duty trucks at auction has diminished because of supply chain issues in the new market. With a limited supply and high demand, medium and light-duty trucks are selling well at auction across all states.  

In Western Australia, there is a significant shortage of prime movers, tippers & heavy haulage trailers due to long lead times on new builds. Very few becoming available on the secondary market as utilisation is high. Buyers are happy to purchase assets with damage or mechanical issues and undertake repairs. New light & medium trucks have better availability, however secondary pricing is strong in anticipation supply may slow with further lockdowns in NSW and Victoria. 

Trailers are also selling well with a high demand for low-loaders, side tippers, curtainsiders, pantechs, and refrigerated pantechs. The Queensland market has seen some strong results including a 2018 Bruce Rock Engineering Side Tipper for $95,000 which represents around 105% of retail, and a 1988 Lusty Allison Quad Axle Deck Widening Low Loader for $98,200 which represents around 110% of retail value. The one exception is still Skel trailers which are proving difficult to sell due to the reduced activity at ports around the country.

Earthmoving & Mining

Earthmoving & Mining

New Earthmoving & Mining Market

Whilst not immune from Covid, the mining industry has been a net beneficiary of strong commodity prices and ongoing construction activity in China. Sales were solid at the start of the year and that momentum has continued for both mining and earthmoving equipment. Caterpillar Resource Industries’ total sales in Asia Pacific were $660 million in the second quarter of 2021, showing an increase of $106 million, or 19%, compared to $554 million in the second quarter of 2020.

Construction Industries’ total sales in Asia pacific were 1.38 billion in the second quarter of 2021, an increase of $101 million, or 8%, compared with $1.283 billion in the second quarter of 2020. The increase was due to higher sales volume, favourable price realization and favourable currency impacts from the euro, Australian dollar, and Chinese yuan. The increase in sales volume was driven by higher end-user demand for equipment and aftermarket parts and the impact from changes in dealer inventories. Overall, dealers decreased inventories more during the second quarter of 2020 than the second quarter of 2021. In the Civil space, inventory levels are growing with Komatsu and Westrac confident of stock arrivals within 6 weeks for all major categories and sizes.

Secondary Earthmoving & Mining Market

Secondary earthmoving and mining equipment continue to sell well across the country. Issues with supply chains for manufacturers have caused delays in delivery time for new machinery, which has had a positive impact on the secondary market. On top of this, interest rates are historically low and COVID-19 stimulus packages are leading to infrastructure spending. Earthmoving and mining equipment sales are expected to continue to surge with the planned infrastructure spend over the next ten years.

The high demand for earthmoving and mining equipment is highlighted in Queensland, where the hammer came down on a 2018 Hitachi ZX360LC-5 Excavator with 1,478 hours for $257,100, representing around 105% of retail value. Queensland also sold a 2007 Caterpillar D8T Crawler Tractor showing 13,600 hours for $255,000, around 100% of retail, and a 2013 Komatsu D27 Crawler Tractor showing 16,311 hours for $209,201 also representing around 100% of retail value.

Whilst clearance rates on the large mining assets are high in Western Australia, the pricing remains steady on the secondary market. Sales of late model machines via auction is virtually non-existent, and the aged machines generally require some spending on mechanical or spec upgrades to meet the contract standards of major players or will find themselves with smaller privately owned businesses who are looking for cost savings by purchasing a second-hand machine. Civil-size machines are seeing the strongest demand, particularly skid steers and excavators in the 8 – 25t range.  Feedback from clients & buyers suggests this space remains strong for the next 18 -24 months, provided no significant lockdowns occur.

Smaller earthmoving equipment such as mini excavators and skid steer loaders are selling extremely well and are in high demand across all states. New South Wales is fielding a high volume of inquiries now for small to medium equipment ranging from 10 to 20 tonnes.

Older, higher hour machines such as Excavators are not selling as well in the second quarter as they were in the first quarter.

Agriculture

Agriculture

Agriculture

Australian agriculture is soaring with seasonal conditions and strong commodity prices driving the market.

New tractor sales exceeded 15,800 units at the end of June, which is 29% ahead of the previous year. This June’s New Combine Harvester sales were up 50% compared to the previous June sales. There are supply chain issues with some agricultural equipment suffering lead times of 9 – 12 months.

The second-hand and auction markets have also been strong with Tractors, Combine Harvesters and other agricultural equipment in high demand. Queensland recently sold a 2003 Lusty EMS and a B Garin Tipper set for $100,000 representing around 110% of retail value, an Alfarm 34 Disc Offset Disc Plough for $43,500 representing around 95% of retail value, a 1996 John Deere 6600 Tractor showing 2,227 hours for $18,750 which is around 90% of retail, and a Kioti DK902C Tractor for $29,500 which represents around 95% of retail value.

The Federal Government’s Temporary Full Expensing program which essentially replaces the Instant Asset Write Off scheme will continue to support demand. Along with the good seasonal conditions, and historically low interest rates, the market is expected to continue to grow.

Automotive

Automotive

New Automotive

Australia’s new-car m

arket continues to surge this quarter.

New vehicle sales in Australia continue to rise with a total from VFACTS recorded 110,664 new cars sold in Australia during June – up only 0.4 % year-on-year from June 20202’s 110,234 total. May saw 100,809 new vehicles which is the second-best May result on record.  In April there were 92,347 vehicles reported as sold, which was the best April on record.

New car prices have shot through the roof during the pandemic with the average price paid for a new car hit $42,000 in June, up almost $4,000 from early 2020.

Australia’s best-selling car models also saw a slight change. Ford’s Ranger ute ended on a high for the 2020–2021 financial year, stealing the top spot from the Toyota HiLux with 6058 examples sold versus 5412 (up 13.7 % and down 17.2 % respectively).

Isuzu’s D-Max ute took third with 3167 sold (up 92.9%), marking only the second time utes have locked out the top three for a month since VFACTS data has been gathered. The D-Max also accounted for 79.9 % of Isuzu’s total sales.

Mazda moved 3018 of its CX-5 SUV (up 19.3 %) to seal fourth place, while the Kia Cerato landed in fifth place with 2711 sold (up 34.5 %).

Top 10 selling models in June

1. Ford Ranger (6058 sold, up 13.7 %)
2. Toyota HiLux (5412 sold, down 17.2 %)
3. Isuzu D-Max (3167 sold, up 92.9 %)
4. Mazda CX-5 (3018 sold, up 19.3 %)
5. Kia Cerato (2711 sold, up 34.5 per cent)
6. Toyota Prado (2610 sold, up 9.9 %)
7. Toyota RAV4 (2501 sold, down 5.0 %)
8. Hyundai i30 (2331 sold, down 1.6 %)
9. Mitsubishi Triton (2240 sold, down 17.6 %)
10. Toyota Corolla (2175 sold, down 27.7 %)

Top ten brands year to date

1. Toyota – 118,953
2. Mazda – 60,446
3. Hyundai – 38,634
4. Kia – 37,894
5. Ford – 37,883
6. Mitsubishi – 37,443
7. Nissan – 23,982
8. Volkswagen – 20,891
9. Subaru – 20,093
10. MG – 19,544

Dealers are still reporting lengthy delays in the delivery of new vehicles, due primarily to production slowdowns and a shortage of key materials, particularly semiconductors. With the majority (90%) of the world’s semi-conductors being in Asia, and approximately 60% in China, the factory closures in this region significantly contribute to the supply shortages and delays. Dual Cab Utes, large 4WD’s and SUVs will continue to soar in popularity with demand for domestic travel increasing. The towing capabilities, lifestyle image, and performance specifications of these vehicles make them more and more desirable.

Secondary Automotive

The demand for quality, late model, low km motor vehicles is still strong in the second-hand and auction market.   

Older used cars now cost thousands more than they did in February 2020. The semi-conductor shortage has hampered new-car production worldwide and sent buyers flocking to the second-hand market. Second-hand prices have surged to never-before-seen highs during the pandemic, and the inflated prices may be here to stay for at least the next year, experts say.   

Many buyers are still electing to buy second-hand rather than wait for delivery of new stock.  The auction results are still strong. For example, in Queensland, recent sales displayed a 2019 Mercedes-Benz GLE showing 14,503 km for $116,100 representing around 100% of retail value, a 2021 Toyota Landcruiser GXL Dual Cab Utility showing 2,015 km for $84,000 which represents 110% of retail value. Queensland also sold a 2020 Land Rover Discovery Sport showing $19,046 km for $63,211, approximately 95% of retail, and a 2019 Holden Colorado Z71 Dual Cab Utility showing 26,450 km for $42,411, around 100% of retail. These sales show that the most popular vehicles at auction with both dealers and buyers have been dual cab utilities, and SUV / Wagons.  

Classic Cars

Classic Cars

Aviation

Aviation

Aviation

Aviation has had a standout quarter with auction achieving 100% clearance of all 38 aircraft, parts, tools, IT and administration items. There is a very strong demand from buyers from across Australia with planes going to many towns in WA, NSW, Qld, ACT, SA, and several going from Hong Kong & Mainland China

The last quarter showed activity in disposals with the liquidation sale of the China Southern Airlines Flight Training School in Western Australia, and a Boeing 757 Freighter is currently up for sale on behalf of the Receiver.

The liquidation sale of China Southern Airlines offered 38 fixed wing aircraft, parts, tooling and everything required to the operation of the flying school. This sale demonstrated there is still demand for small, single-engine fixed wing aircraft.  Sales results for the aircraft sold are below.

Bus and Coaches

Bus and Coaches

Bus and Coaches

Within Q2, 16 Coaches were presented to auction as part of a Major Liquidation, buyer participation and enquiries were strong throughout the sale campaign. Despite Covid 19 border travel restrictions throughout Australia, results on a proportion of the assets, more noticeably with the European built coaches fitted with an Australian built body, attained premium results with 5 assets achieving market value.

It clearly demonstrates the strength and resilience of Bus & Coach companies nationally to grow their businesses with these purchases. We were proud to facilitate this major auction which will enable these companies and the Banks to continue servicing and supporting our local tourism industry.