The Weekend Mumbo: Big spend, big sales for the automotive industry

Welcome to the Weekend Mumbo.

Against advice, after a massive night at the Mumbrella Awards and having not started this until Friday morning, I’m going to look at some data.

But it’s good data. It’s data that goes some way to proving what we all like to reinforce. Spend on marketing, gain in sales.

Thankfully, it’s automotive data, so for me personally, that won’t be quite as hard as many other types of data.

This Tuesday, the SMI released the June spend figures as well as the FY23 spend figures. As we discussed on the Mumbrellacast, there were a few ways of slicing and dicing that.

Overall, it wasn’t a terrible result by any stretch, but it did have its caveats of being front-weighted when it came to the positives and still included some hangover from government spend.

But one sector stood out to me in particular. Automotive. In terms of the SMI, it classes this as Automotive Brand ad spend. For FY23, it had lifted an impressive 20.8% YOY. That was second highest to, unsurprisingly, travel, which was up 46.5%

The difference between travel and automotive is that there wasn’t a massive dip in the auto industry during Covid that it needed to recover from. In fact, it was almost the opposite. More people went out and bought cars.

The used car market became intensely competitive while new stock was in short supply due to both demand and supply side shortages. Essentially, Australians couldn’t buy enough cars. I’ll readily admit that I was one of those Australians that took the plunge and added a car to our garage (OK, carport) during this period.

Adding to the impressive nature of the auto sector spend statistic was the fact that it wasn’t necessarily buoyed by any specific period during the year.

For months now, we have been reporting strong spend by the sector. In March, local SMI boss Jane Ractliffe pointed out Travel and Automotive again as being drivers of spend growth, and the same could be said for February.

The consistent note is that whenever industry sectors have been outlined as driving spend recently, automotive has been one of them.

The great thing about the sector is that it is roughly possible to match spend with sales. I say ‘roughly’ as there are, of course, multiple caveats to this, but, in basic terms, if SMI is noting big spend in January, will car sales increase in February, March and April?

The answer is, in this case, yes. Increased spend noted by SMI has correlated to increased sales, as recorded by the Federal Chamber of Automotive Industries, which produces the VFACTS sales figures released on a monthly basis.

For my own sake of ease, I’ll just copy and paste the first line of Car Expert’s June VFACTS story by Mike Costello. “Australian new vehicle sales totalled 124,926 units in June 2023 – the best result since 2018 when 130,300 cars were sold – to wrap the financial year up in style.”

If you put two and two together, in this case it’s easy to come up with four. That is, increased spend at the start of the year has paid off handsomely for automotive brands, even as society sits in the middle of a cost-of-living crisis.

It’s not just one group within automotive either. If you look at the range of manufacturers in the list, it is easy to see that some are driven by commercial or fleet sales (Toyota via the Hilux, for example), some by passenger (MG – there is a marketing success story if I ever heard one) and some by new technology (Tesla – although let’s wait and see whether Musk’s reputation will soon dull that).

According to VFACTS, private buyers made up 62,351 sales, up 22.5%, while business fleets recorded 46,038, up 33.3%.

It’s a great sign for automotive brands, which in media and marketing, regularly get picked on for over use of global creative in the local market and a lack of creative ideas that go beyond the cliched.

Whatever they are doing, they are doing it right at the moment. Spend more, sell more. It’s great to see.

Rest of the week

The Mumbrella Awards have now been run and won, with Howatson + Company taking away multiple agency of the year categories and Match & Wood with an unexpected victory in the Media Agency of the Year category. The full list of winners can be seen here while you can take a look at pictures from the night here. On that, it’s reassuring to know that if I ever forget my name, the AV crew has my back.

In other news, industry heavyweight Chris Kay is back in Australia and has taken up a position at UTS. It wasn’t long ago the rumour mill was churning hard, placing him at the head of multiple agencies that were looking for leaders. Sometimes the rumour mill is completely out of whack.

Chris Kay in, Andrew Drougas out. The CHEP Network COO has left the business after nearly a decade at the shop.

And the shortlist for the Mumbrella Publish Awards was also revealed.

That’s about as much as my brain can deal with after a big night last night. If you came to the Mumbrella Awards, I hope you had a great night.

Enjoy the weekend.


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