Australia’s two million small businesses drive our economic and employment growth. But what’s keeping Australia’s small businesses on the road?
ORIX Australia’s Dealer Relations and Purchasing Manager Ilario (Larry) Maiolo reveals the best-selling models for 2018 – and why you’re more likely to find a dual-cab ute or family-sized SUV at work for SMEs around the country.
Fit For Multi-Purpose
“The work vehicle is no longer just a work vehicle, it’s also for weekend and family activities,” explains Larry. “So while the number one decision criteria for businesses looking for a new vehicle is purpose, that purpose is more varied than distributing goods or visiting customers.”
That’s why a clear top-seller is the Toyota Hilux – 51,705 Australians bought the dual-cab ute in 2018.
“In our smaller fleets, the Ford Ranger and Isuzu Ute Dmax are also popular. SUVs – such as the seven seater Kia Sorento – now account for 43 per cent of total car sales. And for passenger cars, Toyota Corolla is the winner – followed by the Toyota Camry.”
Reliability Counts In Uncertain Times
Around 400,000 businesses operate a ‘small fleet’ (fewer than 20 vehicles), according to ACA Research’s 2018 survey of 350 business decision makers. And 18 per cent expect the number of vehicles they operate to grow over the next year.
That’s good news for the automotive sector, which saw its first year on year sales decline in three years in 2018.
“Most manufacturers are reporting a slow start in the first quarter of 2019,” notes Larry. He says many manufacturers have changed their warranty period to five years, which will have an impact – as will the election, the slowing property market, and tighter lending policies resulting from the impact of the big banks’ tighter lending rules for small businesses.
“As people become more cautious, they’re likely to look for more traditional, tried and tested models with a lower cost of ownership. That way, if they need to retain the vehicle for longer due to financial constraints, it could last 10 years. This is where you can take advantage of leasing, fixed costs and a new car every three years.” The primary reasons for small fleet brand preferences are functional – fit for purpose (61 per cent) and reliability (60 per cent). “A small business can’t afford downtime due to unexpected repairs,” says Larry. “That quickly leads to loss of income, so they need a trusted model.”
For SMEs looking for all the features of a work and weekend car in one, ‘fit for purpose’ might include five generous seats, lots of storage, room to conduct office work (such as 12volt charging sockets and phone integration technology), and a comfortable driver experience.
Price is also a consideration for 42 per cent of small business decision makers, as is fuel consumption (39 per cent). “The Toyota Camry Hybrid is a popular choice for lower fuel consumption, but in general we’re not seeing significant purchase of electric vehicles yet,” Larry notes. “Business owners are asking questions and researching their options in this area, but the current market choices are limited, and the cost of ownership is still relatively high.”
From Trades To Sales, These Cars Deliver
Toyota is the brand leader by some mileage for small fleets – accounting for 33 per cent of sales. It’s followed by traditional favourites Holden (19 per cent) and Ford (15 per cent).
“Reliability is a key factor for service vehicles, which are on the road constantly visiting clients,” says Larry. “Small hatchbacks like the Corolla suit that need.” Service firms are also more likely to have employees using personal vehicles on company business, according to the ACA Research survey.
For sales professionals, brand image might be more important – according to Larry, premium SUVs in the $50k-$100k bracket are more popular.
Distribution businesses look for lower fuel consumption but are also conscious of image, given the visibility of their brand on the road. “European marques like Fiat, Renault and Mercedes small vans might convey the premium nature of the products inside,” suggests Larry.
And of course, for tradies and construction businesses the dual cab ute reigns supreme. “Toyota Hilux and Ford Ranger are the clear standouts,” according to Larry.
Larry says the current market offers some great opportunities for small businesses to expand their fleet. “There are some good deals available, especially through specialist small business fleet providers like VOOM that can access larger discounts. We also know many business buyers need vehicles immediately to meet new contract needs – so VOOM can help locate exactly what you need.”
If you’d like help with your next small business vehicle purchase, head to http://www.voom.com.au
Small Fleet Insights 1st Edition April 2018, ACA Research.