Which cars to buy - or not - in 2016

Snapshot on the likely automotive winners & losers for 2016

VIDEO TRANSCRIPT

2016 Ford Falcon: arguably the most amazing fall from grace in Australian automotive history. Times have changed; Falcon hasn't

2016 Ford Falcon: arguably the most amazing fall from grace in Australian automotive history. Times have changed; Falcon hasn't

When car companies go backwards, you’re the one who takes the hit. Everything slides, from a customer’s perspective. So let’s identify the long-term losers, and their counterparts who are winning in 2016 - so you can at least put your money on the right horse.

This report is about the Australian car industry. If you’re watching in another country, it might not be relevant. Sorry - but Australia is fundamentally what I do. Sales figures for the close of 2015, released last week, highlight the attention deficit disorder of the media.

Comparisons with 2014 are meaningless, but easy to make - because that’s how the Federal Chamber of Automotive Asshole Industries provides the figures. But what really matters is how companies go over the longer term. So let’s look at that.

Buying a Volkswagen - any Volkswagen - is probably the biggest automotive risk right now, in terms of future resale value

Buying a Volkswagen - any Volkswagen - is probably the biggest automotive risk right now, in terms of future resale value

Spotting the Losers

Identifying long-term losers is especially relevant if you’re in the market for a new car, for two reasons: at the car company level, those on the fast track to the sewage treatment facility are engaged in this frenzy of corporate belt-tightening - everything gets cut. If you need some support … good luck with that. They’re having closed-door meetings about cutting costs on everything from warranty claims to tech support, and the cost of carrying that spare parts inventory. You lose. We don’t have adequate legislative protection here - the level of support you get is down to the good faith of the carmaker.

It’s just as significant at dealership level. Just about every dealer is multi-franchised, and they concentrate on the brands that make the money. So, if you think there’s a Chrysler/Jeep/Dodge dealer out there who’s not wondering how to pull back, hard, it’s time for you to smoke less crack.

Instead of a Golf, buy a Mazda3 >>

The Industry: GFC to Now

So, I’m going to give the car industry the free-est of free kicks in this assessment, and we’ll see who’s improved since 2008. You remember 2008 - it was the year the GFC dropped a neutron bomb on the car industry. The lowest of low bases to improve upon.

Vehicle Sales in Australia, 2008-2015

New-car prices haven’t really changed since then, but average weekly earnings have: up almost 41 per cent in the seven years, according to Ausstats. So there’s really no excuse for going backwards - if you’re doing your job as a carmaker.

Ford & Holden: The Fat Lady's on in Five

No real surprises first up: Ford and Holden continue on their planned trajectory of self-harm.

Ford's Fiesta might appear funky - but in fact it's an epically unreliable little shitbox. Buy a Mazda2 instead - if you know what's good for you

Ford's Fiesta might appear funky - but in fact it's an epically unreliable little shitbox. Buy a Mazda2 instead - if you know what's good for you

Ford is selling 34,000 fewer vehicles today than in 2008. And many of them, like the Focus and Fiesta are just globally unreliable shitboxes - independently verified.

Consumer Reports in the United States - a hugely reputable and respected consumer advocacy organisation - rates the Fiesta as the second least reliable car in the USA for 2015, behind the appalling Fiat 500. Fiesta's unreliability - assessed independently by Consumer Reports - might as well have been off the chart.

Either that or they’re irrelevant, like the Falcon, which is down - incredibly - from 32,000 sales in 2008, to under 6000 last year. Dr Kevorkian is standing by… I mean, when was the last time you saw a new Falcon in traffic?

Ford Sales in Australia, 2008-2015

Falcon sales slump underpins Ford's decline, but Ford has done an impressive job betraying Focus and Fiesta customers, too, thanks to poor design and worse customer support

Ford Falcon Sales, 2008-2015

Falcon sales are - literally, nowhere. How the mighty have fallen. Last year's total Falcon sales were a little less than two average months of Mazda3 sales in Australia
Holden Captiva - the quintessentially evil shape of Holdens to come. The price is right, but everything else is wrong - including the construction and fundamental R&D

Holden Captiva - the quintessentially evil shape of Holdens to come. The price is right, but everything else is wrong - including the construction and fundamental R&D

Holden is just as tragic: selling 27,000 fewer vehicles last year than it did just after the apocalypse. And 23,000 of those are Commodore casualties. After the factory gets fed into the fire, all that will remain of Holden are a host of bad Daewoo-built re-badged embarrassments.

Embarrassments like the South Korean-built Holden Captiva (right). A bad SUV from a worse factory, which was so on the nose when called 'GM Daewoo' that they had to re-brand it as 'GM Korea'. (Re-naming was a lot easier than getting the fundamental engineering right...) If you want to build a truly world-class SUV, start with a Holden Captiva, and then do everything the exact opposite. It's that bad...
Buy a Mazda CX-5 >> or a Hyundai Tucson >> instead.

There is no plan for Holden’s future. None. Ford and Holden are also champions of reprehensibly poor customer service. So they’re both at the absolute top of my 2016 ‘don’t buy’ recommendations. On fundamentals, it’s too great a risk.

Holden Sales in Australia, 2008-2015

Holden will struggle for relevance when the factory closes and it becomes mainly an importer of awful South Korean cars - the trend since 2010 is undeniable (the backlash is in play today)

Commodore Sales, 2008-2015

Discounting and the once-over-lightly revision of the VE Commodore (called the VF) is not enough to make the dinosaur-spec Commodore suddenly relevant to rational buyers

Two of the country's biggest lemons: Holden Cruze >> and Holden Captiva >>
See also: Holden health check >>

Fiat-Chrysler: Profound 'Don't Buy'

Fiat-Chrysler Automobiles - Chrysler, Jeep, Dodge, Fiat and Alfa-Romeo - they’ve done pretty well since 2008 - but there has been a massive decline since 2014 (down 44, 20, 24, 32 and 37 per cent respectively, by 2015). That’s a friggin’ disaster. If that’s your TV show, there’s no ‘series two’.

BEAUTIFUL TO DREAM ABOUT, BUT DO HOLD BACK...

Chrysler Sales, Australia

Chrysler dropped 732 sales - or 44 per cent - in the past full year

Jeep Sales, Australia

Jeep (FCA's most desirable brand here) dropped 5990 sales - or 20 per cent - in the past full year

Dodge Sales, Australia

Dodge plummeted, dropping 363 sales - or 24 per cent - in the past full year, admittedly off a low base

Fiat Sales, Australia

Fiat dropped 1813 sales - or 32 per cent - in the past full year

This points to a massive customer confidence implosion. Terrible reliability, worse customer service, and alleged multi-million-dollar senior executive management fraud - it’s like a reporter’s wet dream.

These five brands - Chrysler, Jeep, Dodge, Fiat and Alfa-Romeo - remain five of the worst possible brand choices you can make in 2016. And the profound drop in buyer confidence across them all should sound the warning bells loud and clear in your head - no matter how downright sexy some of them seem.

(Poor popularity equals poor demand - and drives the price of your trade-in or private sale down at the end of the term. Economics 101 - when the market demand drops, so does the price, if all other factors remain constant.)

See more on lemon cars in Australia >>

Alfa Romeo Sales, Australia

Alfa Romeo dropped 921 sales - or 37 per cent - in the past full year
Volkswagen was a rational 'don't buy' before the emissions scandal. Now, the decision not to buy a Volkswagen is even easier to make

Volkswagen was a rational 'don't buy' before the emissions scandal. Now, the decision not to buy a Volkswagen is even easier to make

Volkswagen: Really?

Volkswagen has doubled its sales since the GFC - so, well done there. But the costs have been extreme: poor quality, under-done R&D and worse customer support made the brand a ‘don’t buy’ in my book. Beautiful cars that are great to drive … before they betray you. And the 2015 emissions scandal is not over, as any current Volkswagen owner is made painfully aware at trade-in time. Volkswagen is now additionally a deadset depreciation disaster.

See how Volkswagen betrayed the world >>

Audi, BMW & Merc

Up the premium end of the field, Mercedes-Benz and Audi have leapt ahead since the GFC - doubling, or more, in outright sales. BMW is up about 50 per cent. But all is not as it seems here. The growth is almost exclusively in the ‘poverty premium’ offerings - the cynical cheapies, which are typically nasty, stripped out shitboxes when you examine them on objective criteria. Audi’s reliability is at least on the up, but it’s part of the Volkswagen scandal, and Benz’s reliability is - metaphorically - afloat on an open latrine - with Consumer Reports in North America verifyling the C-Class and GL-Class in particular in the top 20 least reliable cars list, with Benz generally running 50 per cent below average in the reliability sweepstakes.  

Above: South African-built C-Class (above) looks gorgeous but bites the hand that feeds it, all too often - rated 20th least reliable car in the USA. The even worse GL-Class is a big, bold, boxy Benz statement ... but is anything but at home on the range. A great choice for a spot of well-heeled getting away from it all - especially if you view returning as optional

Audi, BMW & Mercedes-Benz in Australia, 2008-2015

Volumes are all up across Audi, BMW and Mercedes-Benz - but the increase is mostly growth in the cheap 'poverty premium' offerings. (You know, the nasty, stripped out ones that have the badge and the look, and that's about it.)

See how mighty Mercedes made it into my top 20 lemons list, twice >>

Merc by Model, 2015

* including derivatives, ** including light commercials. It's plain to see two-thirds of the three-pointed star's sales volume is now anything but true premium or real luxury

Here in Australia we get that awesome South African-built C-Class, which underpins Mercedes-Benz sales - it’s about a quarter of all Benzes sold here. In fact, A-, B-, and C-Class Benzes and their derivatives make up about two thirds of all Mercedes-Benz sales - the luxury stuff sales are actually pretty small by volume, and also fairly flat.

In other words, without the trumped up cheapies, Mercedes-Benz would be worse than nowhere in sales - but it hurts their brand by devaluing the real luxury offerings costing northwards of $120k.

Audi and BMW are the same - drowning in cheap options. It’s almost like the big three Germans have become conventional car sellers, with an inbuilt luxury division. And that luxury arm is having its brand cachet continuously de-valued by all the plebs buying the lesser models.

It certainly will be interesting to see how that ultimately plays out. Maybe it’ll be a long-term plus, or at least a free kick, for Bentley and Jaguar.

WRX STI is evidence some Japanese car companies can still produce rip-snorting automotive excellence - and while Subaru is doing good work generally, and excellent engineering, it needs to lift its game on aesthetics and servicing cost/frequency

WRX STI is evidence some Japanese car companies can still produce rip-snorting automotive excellence - and while Subaru is doing good work generally, and excellent engineering, it needs to lift its game on aesthetics and servicing cost/frequency

Turning Japanese: Cue the Narcolepsy

Japanese companies like Honda, Suzuki, Mitsubishi and Nissan have demonstrated that they’ve simply been asleep at the wheel since the GFC - and Honda in particular is the Rip Van Winkle of Japanese carmakers. It’s dropped 25 per cent since the GFC, with Suzuki also significantly down and both Nissan and Mitsubishi slightly up (but not nearly enough to uncork any Bolinger any time soon).

Subaru has at least managed to maintain conservative growth - up about 15 per cent in eight years, so hardly setting the world on fire, and kinda clubbed with the ugly stick, but at least not dead from the neck up. WRX, STI, Liberty, Outback - all great cars at a great price - but need to try harder on warranty and service to keep up with emerging trends.

Honda, Suzuki, Nissan, Mitsubishi & Subaru in Australia 2008-2015

Most mainstream Japanese carmakers have essentially stagnated since the GFC, and are losing the fight against the South Koreans when it comes to real growth, Hyundai in Australia is today a substantially bigger player than all of the above
New Toyota Hilux - just enough of an upgrade to stay the market leader

New Toyota Hilux - just enough of an upgrade to stay the market leader

Toyota: the King ... of Mediocrity

Even Japan’s bigwig of banality, Toyota, has lost ground - still in front, but retreating. That’s hardly ever reported. Down about 33,000 sales since 2008. That’s about 14 per cent - a significant slide for the market leader.

Maybe, in the future, Toyota will have to do more than just the absolute minimum required - which, frankly, has been its forte for the past decade.

(Despite all those new sales of its light commercials to ISIS.)

Toyota Sales in Australia, 2008-2015

Toyota is - at best - stagnant, but it remains the leader by a mile and specialises in 'minimum required' mediocrity (86 excepted). Factory closure will hurt Camry-buying Aussie manufacture patriots (and therefore sales) in future, too

Toyota did the absolute minimum required on the new Toyota Hilux >>

Hyundai - the One to Watch

One brand stands out as a stellar performer since the GFC - and that’s Hyundai. Up more than 56,000 sales since Wall Street did the whole lemming/cliff thing. That’s more than double. An incredible achievement when you think about it. Because it also involved changing perceptions that centred on them selling exclusively cheap, nasty shitboxes. So they had to get the product right, and also turn people’s attitudes around - and I’m sure the attitude thing is harder. The GFC was a Hyundai free kick, in a sense. Kia’s also up 65 per cent in that time - and obviously Hyundai and Kia flipsides of the same corporate coin. (They hate that when I point that out.)

Hyundai Sales in Australia, 2008-2015

The figures don't lie. Massive, sustained growth from Hyundai - with a 'free kick' of sorts courtesy of the GFC

Reviewed & recommended: Hyundai i30 >> plus Hyundai Tucson >> and Hyundai Santa Fe >>

Mazda: Is What Honda Was

And Mazda - the ‘other’ strong performer on the Australian automaker landscape - the one mainstream Japanese carmaker with fire still in its belly. Mazda today is, frankly, what Honda was in the 1990s. Since the GFC, Mazda is up more than 40 per cent. It’s now Australia’s number two carmaker.

Mazda Sales in Australia, 2008-2015

Mazda is mature but growing - and one of the few Japanese carmakers capable of remaining firmly on the front foot in the aftermath of the GFC, in terms of both sales and technology

Prediction: This year, Hyundai will be number three - and incredibly, they’ll get there without a ute. These three brands are pushing as hard as they can to increase their sales - successfully - by getting the product and its positioning right.

Reviewed & Recommended: Mazda CX-3 >> plus Mazda CX-5 >> and Mazda3 >>
See also: Best car for a one-off tax deduction in 2016 >>

Bias? Moi?

Now, I know what you are thinking - at least some of you. (Hands up, conspiracy theorists.) You're thinking: This guy is biased towards Hyundai-Kia and Mazda.

How about I let you into a little secret? I’m very biased, about almost everything, and so are you. When it comes to - I dunno - having sex, I’m heavily biased towards women. Not that there’s anything wrong with men. I’m just biased the other way. In terms of food, I’m heavily biased against McDonald’s - mainly because it’s unhealthy shit.

I'm biased about everything. And so are you.

What matters in reporting isn’t bias. Bias is everywhere. In fact, reviews are all about bias - bias towards the best products. Discrimination between good and bad. What matters is not bias, but what informs that bias. I don’t get any money from carmakers. My bias is informed by the facts, which are not in dispute, in so far as I’m aware. (Bias and corruption are completely different things.) I’m critical of both Mazda and Hyundai-Kia. Mazda needs to revise its idiotic i-Stop system and make full-sized spare tyres available in Australia. And Hyundai-Kia needs to ditch the i20 and Rio - with that antiquated 1.4 and it’s Jurassic-spec four-speed auto, which is an advertisement for 10 years ago, in case you were asleep then. And stop pretending with the Genesis (a kind of weird, South Korean take on an E-Class Benz), and introduce a ute ASAP. And replace - or comprehensively upgrade - the iLoad. And not have any more four-star safety fiascos (now thankfully fixed) like it did with the new Tucson >>

Kia Sales in Australia, 2008-2015

Kia emulates Hyundai - almost - at lower volumes. Senior management reshuffle in Australia paid significant dividends in 2015 in particular - as did the advent of sharp new products like Carnival and Sorento

My bias towards these brands - they’re often in my ‘recommended’ lists - is informed by them being objectively superior to the competition. They make more objective sense. Do you want the longest warranty, and the longest service interval, and the latest technology … or do you want a Honda? Do you want the Sorento's or Santa Fe's silky smooth six-speed auto, or the appallingly unreliable CVT in the Nissan Pathfinder? These are easy choices to make, based upon facts, not opinion, and if they do not inform your bias, then please accept my apologies, but you're a dill. My bias is informed by considering the vehicles in isolation, their function, their appropriate technology, their independently reported reliability, plus the level of support you’ll get if there’s a problem, and the prospect of not having a resale value implosion at the end of the term. These are the things real buyers care about.

I’d pitch a Mazda CX-5 or a Hyundai Tucson against the competition any day. There’s no doubt in my mind the Mazda3 is the best mainstream small car available in Australia. Mazda2 - ditto, one rung down the size spectrum. Objectively true. The Hyundai Santa Fe and Kia Sorento are both insanely equipped, well built and capable seven-seat SUVs - I mean, you can’t seriously consider a Kluger or a Territory, or a Pathfinder, or a Euro contender. You can’t - at least not rationally. Not objectively. I’m biased because I want to see you make a smart choice, not a dumb one - perhaps as a result of perceptions about brands that are a decade or more out of date. Or perhaps because you've been sucked in by the megabuck marketing, or seduced by the brand cachet.

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