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What Are Light Commercial Vehicles? Why Are They Outselling Passenger Cars in Australia?

Controversial  ·  May 17, 2021

What Are Light Commercial Vehicles? Why Are They Outselling Passenger Cars in Australia?

It’s fairly easy to see that light commercial vehicles (LCVs) have outdone private passenger vehicles (PPVs) in number. Just look through your windscreen and glance at your side and rearview mirrors; you’ll see that LCVs are all over the streets and highways in Australia. What exactly are LCVs, and what types of vehicles fall in this classification?

What does light commercial vehicle mean in Australia?

The definition for light commercial vehicles varies between countries but generally refers to commercial carriers with a gross vehicle weight (GVW) of 3,500 kg or less. These vehicles are commercial-purposed for transporting goods or people. The term LCV is the catch-all designation for vans, chassis and double cabs, and pickup trucks or utes. 

Some vehicles under this classification are Toyota HiLux, Ford Ranger, Peugeot Expert, Toyota HiAce, Mitsubishi Triton, Nissan Navara, VW Caddy, and the VW Transporter.

Why are LCVs outnumbering the passenger cars in sales?

The first reason could simply be that passenger cars are losing their appeal to Australian car owners and buyers. We’ve seen this fading interest in 2017 when SUV sales first overtook the sales figures for the passenger car segment. Last year, we finally saw SUV sales leapfrogging to twice more than those of the passenger car segment. This year, we see the same trend, but now it’s between LCV and PPV. 

Another factor for the speedy exit of LCVs from showrooms was the federal government’s policy on the Instant Asset Write-Off (IAWO) and its extension. The government implemented this tax-reduction scheme many years ago but increased the threshold to $150k in 2020. It was hoped that this shot-in-the-arm would incentivise businesses to acquire assets for commercial purposes, including LCVs.  

The third would be due to the versatility of LCVs. The above reasons are plausible, but why not LCVs in the first place? These commercial-purpose vehicles are tough-built, powerful, compact, and generally fuel-efficient. While they are built for heavier loads, they’re also well-mannered enough to traverse within city roads and may even double as family cars during their ‘days off.’ It’s high time for the switch.

When did light commercial vehicle sales start picking up?

This increase in sales has just been more noticeable these days, but the exodus of the car-buying public towards LCVs has actually started way back in 2016. This was about the same time when the federal government introduced the IAWO policy for an instant asset offset of $20,000. That enticed buyers, but so much so in 2020 when the threshold amount was increased to $150,000. 

This alone closed the gap between the sales of both vehicle categories—from an annual gap of 316k sales in 2015 to an incredible 16k sales gap in 2020. 

This change in trends was impending, considering that the consistent chart-toppers were utes. The HiLuxes and Rangers were clear favourites as commercial workhorses that also doubled as lifestyle-focused utes.    

Out of the total vehicles sold in Australia, how many are light commercial vehicles?  

Out of the 263,648 total cars sold in Australia for the first quarter of 2021, 60,066 were LCVs (22.78%), showing a marked increase from previous sales.  

What are other light commercial vehicles selling well in Australia?

Aside from the Toyota Hilux and Ford Ranger, the top-ten chart is frequented by Mitsubishi Triton and Isuzu D-Max. Meanwhile, Mazda BT-50, Hyundai iLoad, SsangYong Musso, Renault Traffic, and similar LCVs continue to register strong sales in the Aussie new car market.  

Our Thoughts: Will LCVs outsell SUVs in the near future?

That’s quite farfetched; SUVs are the strongest segment to date. In Australia, 135,900 (over 51%) of total cars sold in the first quarter of 2021 were SUVs, and there’s no letup in this SUV domination. 

We see LCVs edging out medium SUVs, but that’s just one SUV subcategory. Along with the Light, Small, Large, and Upper Large SUV subcategories, the SUV will continue to lord over the sales pie in many years to come.

However, with rapid innovations in technology and electrification of vehicles, changes in automotive trends are the rule in the industry. In other words, market dominance by whatever vehicle category will not be for long. 

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