The Federal Chamber of Automotive Industries revealed the extent of the slowdown on Wednesday, with sales figures from January showing the market fell 3.3 per cent or by almost 3000 vehicles.
Hybrid and plug-in hybrid vehicles as well as SUVs remained the only models resistant to the downturn, as typically popular categories like utes and diesel vehicles tumbled in popularity.
SUVs remain the most popular choice for Australians, comprising more than 60 per cent of new cars. (HANDOUT/VOLVO)
Continued tough economic conditions remained the driving factor behind the slump, chamber chief executive Tony Weber said, which saw most fewer new vehicle sales across most categories.
Passenger vehicle sales fell by 22 per cent during the month, for example, while sales of light commercial vehicles, such as utes and vans, were down by 10 per cent, and heavy vehicles down by 3.2 per cent.
Electric cars suffered one of the biggest sales drops, however, with Australian drivers buying 3832 EVs in January compared to more than 8300 the month before.
"Sales of battery electric vehicles were remarkably low and, based on data from all sources, EVs accounted for just 4.4 per cent of sales – the lowest since October 2022," Mr Weber said.
"This is a major concern because consumers are turning away from EVs at the time the Commonwealth government has introduced the New Vehicle Efficiency Standard."
The standard, which came into effect in January, sets an emissions limit on vehicle brands to encourage the sale of more environmentally friendly vehicles.
Hybrid cars defied the downward sales trend, with an increase of more than 50 per cent. (AP PHOTO)
Penalties for exceeding the standard's emissions targets won't be enforced for six months, but Mr Weber said the government should review other incentives to win over buyers.
"The government needs to reconsider the steps it can take to build consumer confidence in EVs, otherwise their ambitious NVES targets will not be met," he said.
Unlike electric, petrol and diesel vehicles, however, hybrid cars defied the sales trend to record more than 14,000 sales during January – an increase of more than 50 per cent.
Plug-in hybrid vehicles also grew in popularity, reaching 1908 sales, and Electric Vehicle Council chief executive Julie Delvecchio said when combined with battery-powered vehicles, Australians had now bought more than 300,000 electrified vehicles since 2011.
"We know we're far from mission-accomplished – there's still much more work to be done to drive wider EV adoption – but Australia is heading in the right direction," she said.
SUVs remained the most popular style of vehicle for Australian drivers during January, according to the figures, with sales rising by almost six per cent and making up more than 60 per cent of all new cars sold.
Toyota's hybrid SUV, the RAV4, also claimed the title for most popular vehicle during the month, besting Ford's Ranger ute and the Toyota HiLux.
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