Third Quarter Report for 2021

Q3 Report – 2021

This quarter Victoria set global records for the most number of days in lockdown and NSW also experienced months of lockdown. Despite the challenges posed by the pandemic, the Economy has been quite resilient and we are seeing strong prices and demand in the new and secondary markets for assets. 

Markets have been strong with supply shortages and domestic spending pushing up automotive and road transport prices. The more favourable weather has helped the agricultural industry, which has seen one of its best harvests in years. Here is the quarter in short: 

• New truck registrations have soared this quarter 
• Kenworth and Volvo have now reportedly closed their order book for 2022, which will again have a knock-on effect in the secondary market 
• Caterpillar sales decreased in Asia/Pacific mainly due to lower sales volume in the construction sector. 
• All-electric mines are the fastest growing trend for the mining industry in 2021 which could have a major impact on new and used mining equipment. 
• Confidence in the Agricultural sector is as high as we’ve seen it on the East Coast for the past 5-7 years; 
• Australia’s new car market continues to advance with a 21% increase compared to last year’s September sales, while still battling the supply issues that are driving up secondhand prices. 
• Toyota is still dominating the market having their best YTD sales since 2008 however supply issues are likely to slow these sales in Q4 due to the semiconductor chip shortage. 
•  The Ford Ranger has knocked off the HiLux that was at the top for almost 5 years for the best-selling model. 
• Classic and collectible cars continue to gain in popularity, although pricing seems to have leveled out at the end of the quarter.

Road Transport

New Road Transport

Despite numerous lockdowns across the country, new truck registrations have soared this quarter. Figures show a 28.9% gain for the quarter and a 22.6% gain for the year over the previous corresponding periods. Overall, sales are tracking +16% above the 5 Year Average (2015 to 2019) and +22% above 2020 sales this quarter. The market rebounded at the end of August after a slow July, staying consistent with monthly trends. The Truck Industry Council reported a total of 3,685 new trucks and vans were registered in September, bringing the year-to-date total to 30,421 units heading into the final quarter of the year.

Commentary has been released from two of the nation’s biggest banks of an economic rebound which is being reflected in lending demand for road equipment. The economy’s performance and how it has translated into demand for finance for plant and equipment purchases is good news for this sector’s future sales.

Here is a breakdown of how the market is performing across the major segments

Heavy-duty trucks  

A total of 1200 new heavy-duty trucks were registered in the month of September this year, which is up 32.6% from September last year and up 12.8% from September 2019.  

As in the overall figures, it was only Volvo that posted negative growth in terms of its year-to-date tally, while Isuzu was up only slightly. Volvo whilst increasing their manufacturing and sales capacity to challenge Kenworth, they have still recorded an 11% decrease in sales, this has been due to supply chain issues which has consequently slowed their growth.

Heavy-duty year-to-date new registrations (with YOY percentage change)  

1. Kenworth, 1972, +49.9 
2. Volvo, 1171, -11.2 
3. Isuzu, 965, +3.0 
4. Mercedes-Benz, 911, +54.9 
5. Scania, 848, +35.0
   

Medium-duty trucks  

Sales performance was restrained in the medium-duty segment. Sales grew in terms of month-on-month and year-on-year sales with new registration figures going up 25.7% this September compared to last September. The year-to-date tally reached 5460 units – up 10.8% compared to last year. However, the year-to-date total is down 5.5% on the same period in 2019. 

While IVECO dropped considerably, the other top brands showed growth in the medium-duty segment. Fuso exhibited exceptional growth, advancing on its fellow Japanese rivals, Isuzu and Hino. 

Medium-duty year-to-date new registrations (with YOY percentage change)  

1. Isuzu, 2119, +8.3 
2. Hino, 1766, +8.1 
3. Fuso, 1075, +36.6 
4. UD Trucks, 120, +46.3 
5. IVECO, 77, -28.0
    

Light-duty trucks  

The light-duty truck segment showed the most substantial gains across all segments with 1,259 new light-duty trucks registered this September. This equates to a 38.8% increase on the same month last year. The year-to-date total of 10,522 trucks show 31.9% more growth than the first nine months of 2020.  

Those figures are also up greatly on the segment’s performance in 2019, with a monthly increase of 27.7% and a 23.3% year-to-date increase.  

All the top five brands are performing strongly across this segment. Sales have accelerated strongly by e-commerce and last minute delivery throughout the pandemic.

Light-duty year-to-date new registrations (with YOY percentage change)  

1. Isuzu, 4216, +31.2 
2. Hino, 2477, +36.3 
3. Fuso, 1960, +34.0 
4. IVECO, 681, +12.0 
5. FIAT, 420, +19.7

Secondary Road Transport

Supply chain issues for new product continue to drive the secondhand market for heavy, medium and light-duty trucks.

Late-model prime movers have been keenly sought after in the second-hand and auction markets.  Queensland recently sold a 2015 Volvo FH13 Prime Mover showing 1,067,315 km for $98,200 representing around 105% of retail. Late-model European trucks with automatic transmissions have also remained popular throughout the third quarter. The team in Victoria recently sold a 2018 Volvo FH540 6×4 Prime Mover for $242,733, showing 95% of retail. Older trucks are selling unexpectedly well, with our Queensland team selling a 2011 Kenworth K200 Prime Mover showing 474,789 km for $95,000, representing around 95% of retail.  Fleet planning and identifying any future asset replacement will need to be carefully considered as lead times on new assets are extending out in some cases beyond 8 months with some manufacturers. Kenworth and Volvo have now reportedly closed their order book for 2022, which will again have a knock-on effect in the secondary market.

Medium and light-duty trucks are proving to be very popular at auction. With lead times for new Japanese trucks reportedly pushing out beyond 2022, results at auction remain consistently strong. Victoria recently witnessed a 2018 Isuzu NNR 45-150 Tray Body Truck sell for $49,286, showing 95% of retail, selling to an end user. Older, non-mobile trucks are selling surprisingly well because of the shortage of trucks in the secondhand market. The Queensland team recently sold a 2014 Mitsubishi FN 600 Pantech showing 544,813 km for $63,600 representing around 100% of retail, and an ex-Council 2012 Hino FM Water Truck showing 183,321 km for $107,600 which represents around 105% of retail.

Trailers are having an outstanding third quarter with strong demand for Low Loaders, Side Tippers, Curtainsiders/Tautliners, Pantechs, and Refrigerated Pantechs. Trailers of all types are in short supply, and quality trailers are keenly sought after at auction. Queensland have recently sold a 2019 Haulmark A&B Tautliner set for $130,100 which represents around 95% of retail, and a 2019 AAA Trailers Drop Deck Trailer for $58,200 which represents around 110% of retail. Results at auction remain consistently strong in Victoria with a Custom-Built Drop Deck Horse Float (non-complied) selling for $127,949 to an end user. The one exception in the secondary trailer market has been Skel trailers which have been difficult to sell due to the reduced activity at ports around the country. However, this appears to be improving with demand increasing in the past month.  

Mining & Earthmoving

New Mining & Earthmoving

While sales have increased across other regions in the construction industries, sales in Asia/Pacific have diminished. As dealers decreased inventories in the 2021 third quarter, this caused a drop in sales compared to the third quarter of 2020. Caterpillar Sales in Asia/Pacific reached $1.07 billion in the 2021 third quarter, showing a 13% decrease from last year’s $1.2 billion. However, with restrictions easing, the construction industry is showing signs of improvement in Asia/Pacific, with the latest Australian Performance of Construction Index (PCI) going up 14.9 points to 53.3 in September. The PCI is adjusted every month by the Australian Industry Group and Housing Industry Association. If a reading is above 50, this indicates expansion. The higher the reading, the stronger the expansion.

Mining sales have increased in Asia/Pacific with Sales and Revenues for Mining reaching $744 million, conveying a 32% increase from the $564 million earned during the 2020 third quarter. This is mostly due to the high demand for equipment and after-market parts. End-user demand was higher in both mining and heavy construction in the 2021 third quarter.

A recent report released by ABB who is an international technology company that specialises in automation has conceived a game-changing eMine to fast-track transition to all-electric mines. The pressure on Australian mining companies to become more sustainable has intensified,” said Nik Gresshoff, Head of Mining for ABB Australia. “Every company is asking the question: how do we get to net-zero emissions? “Electric vehicles (EVs) not only produce zero emissions but also produce less heat, thus reducing cooling costs in underground mines. This could have a big impact on current and used mining equipment with it potentially becoming redundant in an all-electric mine.

Secondary Mining & Earthmoving

Good quality, low hour earthmoving equipment continues to sell well. Supply chain issues continue to cause delays in delivery times for new machinery, and this has a positive effect on the secondary market. The Queensland team sold a Komatsu PC200LC-8 Excavator showing 7,863 hours for $79,500 representing approximately 100% of retail.  

Smaller earthmoving equipment such as mini excavators and skid steer loaders are also selling extremely well across the country. The Victoria team recently sold a 2016 Bobcat S70 Skid steer loader, displaying 1,622 hours for $17,789, showing 80% of retail to a landscaping business in NSW. Queensland also recently sold a 2017 JCB 426 Wheel Loader showing 5,706 hours for $110,000 representing approximately 100% of retail.

Larger earthmoving and mining machinery remain in high demand. Recently in Victoria, a 2017 Terex TDS 825 Slow Speed Shredder with 150 hours was offered in a stand-alone online auction, the asset went to an end user for $447,168, achieving 80% of market value.

Older, higher hour machines and have been harder to sell, however, demand for these has picked up steadily over the quarter. In August, Queensland sold a 2014 Hyundai Robex 80CR-9 Excavator showing 2,638 hours for $59,900 around 110% of retail.  This machine was offered in the June and July sales being referred at $40,000 on both occasions.  

Agriculture

New Agriculture

New and second-hand agricultural machinery sales are expected to top $4 billion for the first time nationally this year, with a record first half-year of tractor sales in WA.

But stock shortages and delivery delays out to 12-18 months from overseas “source factories” are limiting combine harvester and hay equipment sales volumes and value in WA, according to Alan Kirsten, managing director of agricultural machinery sales market research company Agriview Pty Ltd.

National combine harvester sales were up 15% to 154 (134) and on a rolling 12 months basis stand at 692 units.

On a rolling 12-month basis tractor sales are 22% up at 1407 units – also a record result.

In that market segment, sales of tractors rated at under 60 horsepower were up 43% to 230 (161 in the corresponding six months last year) and over 60hp sales were up 31% to 652 (498).

If the forecast in ABARES’ (Australian Bureau of Agricultural and Resource Economics and Sciences) Agricultural Commodities: September Quarter report proves to be accurate, then it will be the first time Australia’s agriculture sector has been valued at over $70 billion, the organisation said.

The new figure of $73 billion in gross value of production (GVP) is a hefty increase from the previous prediction of $65 billion in the June 2021 report.  

Secondary Agriculture

The second-hand and auction markets for agricultural equipment have been strong again this quarter, with supply chain issues for new product still a major concern.  Dealers and end users have been gearing up for what is predicted to be another bumper season.  Historically low interest rates, strong commodity prices, and Government incentives are also driving the market and sector as a whole.   Slattery Auctions in Queensland has sold a 2012 John Deere 6330 Tractor showing 5,121 hours for $40,000, representing around 100% of retail, a John Deere 6600 Tractor showing 2,227 hours for $18,750 which is around 90% of retail, and a 2010 New Holland T7030 Tractor showing 10,751 hours for $23,000 which represents around 90% of retail. 

In Victoria Q3 has continued to see very few agricultural assets presented to auction, at our July Machinery Auction an ex-council 2014 New Holland T5-95 Tractor achieved 90% retail price, finally selling to an end user for $37,536.

Automotive

New Automotive

Australia’s new car market continues to advance despite supply issues, price increases and lockdowns. Recent figures show 83,312 new cars sold last month conveying a 21% increase compared to last year’s September sales.  

While the third quarter 2021 sales are higher than that of 2020, the September 2021 tally is lower than the September 2019 result of 88,181, and the September 2018 total of 94,711. This is the second-lowest third quarter since 2011.  

Year-to-date sales for 2021 are up on 2020 by 26.6%, sitting at 816,140 units – the best live YTD result since 2018 (881,005). 

• September 2021 sales – 83,312, up 20.8% 
• YTD 2021 sales – 816,140, up 26.6%
  

New South Wales accounted for the largest portion of the nation’s new-car sales with 23,965 units. However, this was an 8% decrease compared to last year’s sales. Victoria nearly doubled its sales this quarter compared to last year’s third quarter with 20,495 units. Victoria’s 96% sales increase nudged the state past Queensland’s 20,062 units.

Toyota is still dominating the market having their best YTD sales since 2008 however supply issues are likely to slow these sales in Q4 due to the semiconductor chip shortage. 

 Noteworthy brands for going beyond the average market average this quarter include Great Wall Motors (up 196.7% and 13th overall), LDV (up 50.8%), Jeep (up 65.3%), Lexus (up 90.3%), Peugeot (up 198.2%), and SsangYong (up 138.8%).  

Those that rolled in below market average include Honda (down 44.8%), Porsche (down 34.2%), BMW (down 27%), Renault (down 17.9%), Mercedes-Benz (down 17.1%) and Audi (down 12.2%).  

Looking at the most popular models this quarter, the Ford Ranger has knocked off the HiLux that was at the top for almost 5 years. 

Secondary Automotive

Quality, later model secondary vehicles have remained desirable throughout the third quarter. Victoria saw the sale of a 2020 Ram 1500 Laramie sold for $130,493

 100% of retail, and a 2017 Range Rover Autobiography sold for $148,988, 95% of retail, both vehicles finally selling to local dealers. Auction results are still strong in Queensland, although prices in most categories softened slightly over June, the September quarter has seen prices rebound. 

Supply chain issues have worsened, partly due to the shortage of semiconductors. Wholesale buyers are reporting a major shortage of vehicles to purchase. With some dealerships projecting an 8–12-month lead time, many buyers are still electing to buy secondhand vehicles rather than wait for delivery of new stock.  

SUV/Wagon’s and Dual Cab Utes remain the most popular vehicles on the second-hand and auction markets.  Queensland have recently sold a 2019 Audi SQ5 showing 14,365 km for $80,950 which represent 100% of retail, a 2019 Ford Ranger Raptor showing 103,487 km for $60,000 representing around 100% of retail, and a 2016 Toyota Landcruiser GXL Wagon showing 121,698 km for $73,100. 

There has been a decline in secondary car sales in Victoria. This shows a clearance rate of 46% and a drop of 14% from the previous quarter. The lockdowns in VIC and NSW are believed to be contributing factors to this along with high vendor expectations for vehicles throughout this quarter. As lockdowns are ending, it is expected that there will be a rise in sales, particularly late model LCV (light Commercial Vehicles)  and SUVs.  

Prestige vehicles continue to peak strong market interest. Recently in Victoria, a 2017 Ferrari GTC4 Lusso was presented to auction, selling to a NSW end user for $317,028, 85% of retail.  

Dealers in Victoria forecast that there will continue to be a mass shortage of used cars throughout Australia, through this year and until March 2022. Toyota production is scheduled to decrease to 40% for the next 3 months due to the semiconductor shortage and it is also suspected that other manufacturers will follow in the same suit this will result in low stock.

Classic Cars

Classic Cars

Classic and collectible cars continue to gain in popularity, although pricing seems to have leveled out after quarter-on-quarter growth over the last 12 months.  Ford and Holden’s classics from the 1960s, 1970s, and 1980s remain the most popular with collectors and investors.  The last of the Holden V8’s manufactured in Australia in 2017 are also proving more popular. Anything along with the lines of Australian Built V8 also perform well given they are no longer being manufactured. 

In QLD, we have sold a 2007 FPV GT R Spec Cobra Sedan showing 1,303 km for$108,600, and its sister Utility a 2007 FPV Super Pursuit GT Cobra showing on 63 km for $102,350.  We have also sold a 1965 HD Holden Premier X2 showing 25,205 km for $61,100, a 1963 EH Holden Special Sedan showing 68,346 km for $46,100.  Along with the Australian manufactured cars, we also sold on behalf of a Bankruptcy Trustee a 1972 C3 Corvette

 Stingray showing 6,982 km, however in poor condition for $54,111.  These sales all represent around 100% of retail, and classic cars tend to in the main get sold at auction, and there is no real differential for Market or Retail Value as opposed to Auction Value.