Australia's new vehicle market remains under pressure, while EVs and Chinese brands continue to penetrate more rapidly

Overview

This report is Goldman Sachs' quick commentary on Australia's May 2026 VFACTS new vehicle data. The report argues that Australia's new vehicle market remains sluggish, with total sales down 2.3% year over year, while the market mix continues to tilt toward EVs and Chinese brands. High fuel costs, elevated interest rates, and supply constraints are jointly affecting sales of traditional models and may reduce demand elasticity for automotive aftermarket accessory companies such as ARB Corp and Amotiv.

Core views

The core view is that total volumes remain under pressure, but changes in mix matter more. GS's key model index fell 28% year over year, reflecting weak performance from key 4x4 models such as the Toyota Hilux, Ford Ranger, and Toyota Prado; meanwhile, EVs and Chinese brands are growing rapidly and changing the model mix of the Australian auto market. Because lower-cost Chinese-brand and EV models typically generate lower demand and per-vehicle spending for traditional 4x4 accessories, Goldman Sachs believes this creates pressure on ARB/AOV's relative exposure, although stock ratings remain differentiated, with Amotiv rated Buy and ARB Corp rated Neutral.

Analysis framework

The report mainly analyzes VFACTS monthly new vehicle sales data, Goldman Sachs' in-house composite index of 10 key 4x4 models, changes in powertrain type and brand-origin mix, and company valuation models. Target prices for both ARB and Amotiv are based on a 50/50 blended DCF and P/E valuation approach.

Methodology notes

• Market trackingGS Index

  Composite index of key 4x4 models

  Based on 10 key models, together with estimated 4x4 accessory attachment rates and spending levels, Goldman Sachs constructed an index to track the demand environment relevant to ARB/AOV; the index fell 28% year over year in May.

• Valuation methodsDCF/P/E blended valuation

  50/50 blended valuation

  ARB's 12-month target price of A$22.30 is based on a 50% DCF and 50% P/E methodology, with parameters including WACC of 9.2%, TGR of 2.5%, RfR of 3.5%, and 20x weighted FY26/27E P/E; Amotiv's 12-month target price of A$10.70 is likewise based on a 50% DCF and 50% P/E methodology, with parameters including WACC of 9.7%, TGR of 1.5%, RfR of 3.5%, and 13x weighted FY26/27E P/E.

• Factor profileGS Factor Profile

  Growth, financial returns, valuation multiples, and composite percentiles

  Goldman Sachs Factor Profile compares stocks with the market and industry peers across growth, financial returns, valuation multiples, and composite indicators, using analyst forecasts and standardized percentiles for presentation.

• M&A assessmentM&A Rank

  Probability score of becoming an acquisition target

  Goldman Sachs uses an M&A Rank from 1 to 3 to assess the probability that a covered company becomes an acquisition target, where 1 represents high probability, 2 medium probability, and 3 low probability; when the probability is high or medium, M&A factors may be incorporated into the target price.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Amotiv Ltd. (AOV.AX)

  An Australian automotive aftermarket and accessories company, with demand affected by new vehicle sales, vehicle mix, and accessory spending rates.

  Strengths

  Goldman Sachs maintains a Buy rating with a 12-month target price of A$10.70; the valuation multiple of 13x weighted FY26/27E P/E is broadly in line with the 10-year average, reflecting normalization in the operating environment and more stable internal operations after strategic restructuring.

  Weaknesses

  It has relatively lower exposure to lower-cost Chinese-brand and EV models, while these models also have lower aftermarket accessory attachment and consumption rates.

  Comparison

  Compared with ARB Corp, the report assigns a more positive rating to Amotiv; the implied upside in Amotiv's target price is also higher.

  Risks

  Production and supply chain risks, product technology obsolescence, overreliance on a single customer or new entrants, labor shortages, and M&A and integration risks.

• ARB Corp

  A 4x4 aftermarket accessories company whose demand is closely linked to sales of key models such as the Toyota Hilux, Ford Ranger, and Toyota Prado.

  Strengths

  The company remains within Goldman Sachs' relevant Australia coverage universe and has a clear 12-month target price of A$22.30.

  Weaknesses

  The key model index fell 28% year over year in May, and the company's FY25-28E net profit CAGR is expected to be about +1.1%, below the pre-pandemic historical average of about +6.5%.

  Comparison

  Rated Neutral, with valuation based on 20x weighted FY26/27E P/E, below the 10-year average of 25x to reflect a lower growth outlook.

  Risks

  Weak new vehicle sales, cost inflation, production and supply chain issues, personnel and culture, reputation, distribution disruptions, disruptive technologies, and a slowdown in discretionary consumption.

• Australia new vehicle market

  A macro and industry-level base demand variable that directly affects automotive aftermarket accessory companies.

  Strengths

  Rapid growth in EV and Chinese-brand vehicle sales shows that the market still has structural growth drivers.

  Weaknesses

  Total sales declined year over year, while traditional ICE vehicles, light commercial vehicles, 4x4s, and large SUVs are under pressure.

  Comparison

  EV sales rose +112% year over year and Chinese brands +74% year over year, significantly outperforming the total market's -2.3% year-over-year performance.

  Risks

  High interest rates, high fuel costs, supply constraints, and slowing discretionary consumer spending may continue to weigh on overall volumes.

Key data

• Australia total new vehicle salesYoY -2.3%The new vehicle market remained sluggish in May.
• GS key model indexYoY -28%Affected by Toyota supply constraints and a shift toward EV/Chinese-brand models.
• Light commercial vehicles and 4x4Light commercial vehicles YoY -15%; 4x4 YoY -18%Highly correlated with demand for ARB/AOV aftermarket accessories.
• SUVs and passenger vehiclesSUVs YoY +4%; large SUVs YoY -25%; passenger vehicles YoY -8%The decline in large SUVs indicates pressure on traditional high-accessory-consumption models.
• EV salesYoY +112% to 21.3k unitsTesla became Australia's best-selling vehicle for the month for the first time.
• ICE vehicle salesGasoline vehicles YoY -30% to 28.7k units; diesel vehicles YoY -26% to 25.2k unitsHigh fuel costs are driving demand toward EVs.
• Chinese-brand salesYoY +74% to 37.2k units, accounting for 35% of new vehicle salesShare increased significantly from 8% in July 2021, mainly including brands such as Chery, GWM, MG, and BYD.
• Performance of key modelsToyota Hilux YoY -19%; Ford Ranger YoY -6%; Toyota Prado YoY -64%Toyota Prado declined by 1,745 units, Toyota Hilux by 947 units, and Ford Ranger by 287 units.
• ARB Corp target priceA$22.30Based on a 50/50 blended DCF and P/E valuation; rated Neutral.
• Amotiv target priceA$10.70Based on a 50/50 blended DCF and P/E valuation; rated Buy.

Impact & implications

From an investment perspective, the report suggests that the risk in Australia's auto market is not just declining total sales, but the rapid shift in sales mix toward EVs and Chinese brands. If lower-cost EV and Chinese-brand models continue to gain share, aftermarket accessory spending related to traditional 4x4s and large SUVs could come under pressure, affecting the quality of revenue growth for ARB Corp and Amotiv. Amotiv is maintained at Buy due to operational normalization and post-restructuring stabilization, while ARB Corp remains Neutral due to a weaker growth outlook, with FY25-28E net profit CAGR of only about 1.1%.

Risks

• Higher interest rates, fuel costs, and supply constraints may continue to weigh on Australia's total new vehicle sales.
• Supply constraints or model-transition periods for key brands such as Toyota may drag on 4x4 and large SUV sales.
• Rising share of EVs and lower-cost Chinese-brand models may reduce the attachment rate and per-vehicle spending for traditional aftermarket accessories.
• ARB Corp faces risks from new vehicle sales, cost inflation, supply chain, distribution, reputation, and a slowdown in discretionary consumption.
• Amotiv faces risks from production supply chains, product technology obsolescence, customer concentration, labor shortages, and M&A integration risks.

What to watch

• Changes in total new vehicle sales, EV penetration, and Chinese-brand share in subsequent monthly VFACTS data.
• Launch timing of new models such as the 9th-generation Toyota Hilux, Nissan Navara D27, Ford Ranger Super Duty, 6th-generation Toyota RAV4, and Nissan Patrol Y63.
• The impact of fuel prices, interest rates, and discretionary consumer spending on new vehicle demand.
• Whether the GS key model index continues to decline, and whether 4x4 accessory attachment rates and spending levels recover.
• Revenue growth, margins, supply chain stability, and inventory trends in upcoming results from ARB Corp and Amotiv.