New car sales stall in 2025 but plug-in hybrid vehicles surge again

Economic recovery and lower interest rates did little to spark demand for new cars in 2025 with sales effectively flat.

Just over 1.2 million new vehicles were bought through the year, down 0.9 per cent on 2024, according to Federal Chamber of Automotive Industries data.

“While overall volumes eased slightly, the market continues to evolve as new technologies become more widely available,” FCAI chief Tony Weber said.

The dip was despite an upswing in economic growth, rising consumer spending and three rate cuts by the Reserve Bank of Australia — with the market now strong enough to spark talk of a rate hike within months.

Data from the Australian Bureau of Statistics shows motor vehicle prices have lifted 17 per cent since before the pandemic, a significant jump but less than overall inflation.

The numbers suggest consumers are spending more on necessities and putting off car buying.

Yet there was plenty of activity in plug-in hybrids, showing car buyers becoming more environmentally conscious.

Sales rocketed 130 per cent to almost 53,500 units. That’s up dramatically from just 1,700 in 2020.

Battery vehicles made up 8.3 per cent of the market at 103,000, up from 7.2 per cent two years ago, although major suppliers Tesla and Polestar are not counted in the figures.

Separate Electric Vehicles Council data released on Tuesday showed those two brands sold more than 30,000 cars combined.

Plug-in hybrids, batteries and traditional hybrids — up 15 per cent to 199,000 sales — represent more than a quarter of all new vehicles. That will need to more than triple by 2035 to hit Federal emissions targets.

“Many consumers are choosing hybrid and plug-in hybrid vehicles as a practical transition toward lower emissions,” Mr Weber said.

“While the industry is investing heavily in battery electric technology, uptake ultimately depends on consumer readiness and the availability of reliable public recharging infrastructure.”

SUVS now dominate the market with more than 60 per cent of sales.