The Australian new vehicle market has kicked off 2025 with a sluggish start, raising questions about whether the post-pandemic sales boom is finally winding down. With total sales for January down 3.3% compared to the same month last year, the industry is grappling with weakening consumer confidence and economic uncertainty.
Despite an expanding range of models and government incentives, electric vehicle (EV) sales have continued to struggle, with the segment recording its lowest market share since October 2022. Meanwhile, the Toyota RAV4 remains the top-selling model, reinforcing the continued dominance of hybrids in the market.
Sales Slowdown: A Sign of Things to Come?
January’s total of 86,804 new vehicle sales represents a drop of nearly 3,000 units from the same period in 2024. This decline follows a weak second half of last year, suggesting that the industry may be facing sustained headwinds.
“The market remains flat, and current economic conditions are a major consideration for consumers across all segments,” said FCAI Chief Executive Tony Weber.
The impact is being felt across various vehicle classes. Passenger vehicle sales have plummeted by 22.2%, while the light commercial sector is also down 10.5%. The SUV market remains resilient, posting a 5.9% increase in sales, reinforcing its position as the dominant segment.
Toyota continues to lead the market with 18,424 sales in January, followed by Mazda (8,322), Ford (6,830), Kia (5,720), and Mitsubishi (5,681). However, even these industry heavyweights are navigating a more cautious consumer landscape.
EV Sales Continue to Struggle
One of the biggest concerns emerging from the January sales figures is the ongoing struggle of battery electric vehicles (BEVs) in Australia. Despite the government’s push to encourage EV adoption through Fringe Benefits Tax (FBT) exemptions and an increasing number of available models, BEV sales accounted for just 4.4% of the market—marking their lowest share in over two years.
In contrast, hybrid and plug-in hybrid vehicles continue to gain traction, making up nearly one in five new vehicle sales. Traditional hybrids accounted for 17.1% of the market, while plug-in hybrids (PHEVs) held a modest 2.2% share.
“The government needs to reconsider what steps it can take to build consumer confidence in EVs,” Weber warned. “Otherwise, their ambitious New Vehicle Efficiency Standard (NVES) targets will not be met.”
This stagnation in EV uptake comes at a critical time, as manufacturers ramp up their electric offerings and infrastructure challenges persist. Charging availability, resale value concerns, and higher upfront costs remain barriers for many consumers.
Toyota RAV4 Still Reigns Supreme
Amid the shifting landscape, one constant remains—the Toyota RAV4 continues to dominate Australian sales charts. The popular SUV was the best-selling vehicle in January, with 5,076 units sold, far ahead of its closest competitors, the Ford Ranger (4,254) and Toyota HiLux (3,302).
The strong demand for the RAV4, particularly its hybrid variants, highlights Australian buyers’ preference for fuel efficiency and practicality. Other top-selling models included the Toyota Prado, Mitsubishi Outlander, and Mazda CX-5, reinforcing the dominance of the SUV category.
What’s Next for the Market?
With economic pressures persisting and EV adoption failing to accelerate, 2025 is shaping up to be a challenging year for the Australian automotive industry. While hybrid vehicles continue to gain ground, the government and industry stakeholders may need to rethink their approach to driving EV adoption.
For now, all eyes will be on whether February and March bring a turnaround or if the slowdown will continue, confirming that the party is indeed over for the booming new car market.
