Despite an increase in new car deliveries over the last six months, SG Fleet’s order pipeline for Corporate vehicles increased 15% over 12 months to 10,734 vehicles as of December 2022. The Novated lease pipeline also increased 35% in the same 12 month period to 5,932 vehicles.
As the largest Fleet Management Organisation in Australia, SG Fleet represents approximately 30% of the FMO market. If every other FMO has a similar pipeline of orders, there’s 100,000 orders for new fleet and novated lease vehicles waiting to be delivered when you include fleets that do not use an FMO.
With an average of 90,000 new cars being sold each month in Australia, we’ll need 13 months in 2023 to clear the backlog.
There are two trends emerging in 2023 that will change the shape of this massive order pipeline. The first are the dual economic headwinds of inflation and rising interest rates which will soften consumer demand and potentially lead to order cancellations from retail, novated and fleet buyers.
The other is the FBT Exemption on EV and PHEV which has increased the demand from novated lease buyers and some fleets. SG Fleet reported that enquiries on electric vehicles for novated leasing quadrupled since the FBT Exemption was announced.
At a recent webinar on the FBT Exemption hosted by IPWEA Fleet, Philip Owen, National Novated Manager at Summit Fleet Leasing and Management, told the audience that enquiries had increased 30% and that the average value of vehicles being quoted increased from $40,000 to $65,000 due to the high percentage of EVs.
In the February VFACTS results there were some indications that fleet buyers are starting to get their share of supply again. New car sales to Business is up 9.9% in the first two months of 2023 compared to 2022. However sales of light commercial vehicles were down 6.7% so far this year.
SG Fleet forecast in their results presentation that used vehicle prices and supply chains normalise in 2024. So 2023 might be another year of extended delays for new vehicles wait unless you’re looking at vehicles manufactured in China.
