That assumption is now being tested. With the introduction of the New Vehicle Efficiency Standard (NVES), Australian importers and distributors are discovering that vehicle availability is shaped less by what customers ask for and more by what can be ordered, secured, and allocated months in advance. Vehicle mix is no longer simply an inventory calculation. It is becoming a strategic business decision.
Demand Is No Longer the Whole Story
Many organisations still rely heavily on demand forecasting to determine what customers will buy. In practice, allocation decisions influence demand long before a customer enters the showroom. If a preferred vehicle configuration is unavailable, what customers want isn’t an apology. It’s a firm commitment: when it will be available, where, and at what price. Too often, they simply choose from what is immediately accessible instead.
Historically, this imbalance was viewed as a supply chain challenge. Under NVES, it becomes a financial one. Every vehicle imported into Australia now contributes positively or negatively to a brand’s emissions position. Higher-emission vehicles increase liability, while lower-emission vehicles support compliance and may generate tradable credits. As a result, vehicle mix is no longer solely a matter of demand planning. It has direct balance-sheet implications. The question is no longer: how many vehicles you can sell?
It is increasingly: which vehicles should be made available in the first place, and how early can those decisions improve your NVES position?
Brands that influence vehicle mix earlier are better positioned to protect profitability, reduce emissions exposure, and avoid costly compliance surprises.
NVES Changes the Economics of Vehicle Allocation
One of the most common misconceptions about NVES is that emissions performance is determined at the point of sale. In reality, the most consequential decisions are often made months earlier. During a recent Automotive Round Table discussion, Jakub Woliński, Managing Director of Hicron Australia, posed a simple question:
“Where do you influence the mix earliest today: factory ordering, allocation, or dealer configuration? And what would it take to move that control one step earlier?”
The question highlights a critical reality. The earlier an organisation can influence vehicle mix, the more strategic options it retains. The later it acts, the fewer levers remain available. By the time a vehicle reaches a dealership, most of the decisions affecting its commercial performance and emissions impact have already been made.
OEM Capacity: The Missing Variable in the Planning Equation
Customer demand and emissions targets are only part of the equation. A third factor ultimately shapes what reaches the Australian market: OEM production capacity. Even when an importer understands both customer preferences and NVES requirements, there is no guarantee the OEM can supply the desired mix. Australia competes with other markets for production allocation, and high-demand vehicles, particularly hybrids and EVs, are often committed long before local demand becomes fully visible.
This creates a new planning challenge. Importers increasingly need to secure production capacity months in advance while balancing four competing priorities:
- what customers want to buy,
- what supports NVES compliance,
- what protects profitability,
- what the OEM can realistically supply.
Under NVES, ordering too late may become as risky as ordering the wrong vehicle. When demand becomes obvious, compliant production capacity may already be committed elsewhere. The consequence is reduced flexibility, fewer allocations of lower-emission vehicles, and greater emissions exposure. In many cases, vehicle mix is effectively determined when manufacturing capacity is allocated globally, long before a customer enters a dealership.
Smarter Allocation Becomes a Strategic Capability
Securing production capacity is only part of the challenge. The next question is often more difficult:
What happens when dealers collectively request more vehicles than the OEM can provide?
Historically, many distributors relied on manual allocation processes, spreadsheets, historical relationships, and case-by-case negotiations. Those approaches become increasingly difficult to justify when every vehicle affects NVES performance, supply remains constrained, and dealers compete for the same inventory.
The question is no longer: who receives the next vehicle?
It is: how do we allocate scarce inventory in a way that balances customer outcomes, dealer trust, profitability, and NVES performance simultaneously?
Transparency is becoming a competitive capability. Dealers need confidence that allocation decisions are based on clear and defensible principles rather than subjective judgement. Those principles may incorporate customer orders, order age, sales performance, conversion rates, regional demand, inventory health, dealer capability, and the NVES impact of each allocation. Without transparency, constrained supply creates friction. With transparency, it can strengthen trust across the network.
The Hidden Question Behind NVES
One of the most important questions facing importers today is rarely discussed openly:
How many non-compliant vehicles can an organisation afford to import?
Not from a sales perspective, but from a portfolio perspective. If customers continue to favour larger SUVs and light commercial vehicles while EV adoption grows more slowly than expected, organisations need a clear understanding of their current NVES position, future emissions exposure, available credits, and the implications of different supply scenarios.
Most organisations can report what they sold last month. Far fewer can confidently answer questions such as:
- How many additional high-emission vehicles can we import this quarter?
- Which allocations most effectively improve our NVES position?
- Which dealers consistently convert low-emission inventory into sales?
- At what point does changing the vehicle mix become more economical than purchasing credits?
These are not simply compliance questions. They are business planning questions that belong alongside discussions about revenue, margin, and growth.
Before Investing in New Systems, Ask These Questions First
Technology will inevitably be part of the solution. However, many organisations evaluate software before defining the business decisions that technology is expected to support. Before launching a new VMS, allocation platform, dealer portal, or NVES initiative, leaders should consider four areas.
- Strategy & Governance
Where should vehicle mix decisions be made within the organisation?
Who is accountable for NVES outcomes? - OEM Capacity & Ordering
Which vehicle categories face the greatest production constraints?
How early must production capacity be secured? - Dealer Allocation
What constitutes a fair and transparent allocation model?
Should NVES performance influence allocation decisions? - Data, Visibility & Technology
Can we reliably model future NVES exposure?
Which critical planning decisions still depend on spreadsheets?
Final Thought
For years, the automotive industry’s central planning challenge was improving demand forecasting. NVES is forcing a different conversation. The organisations most likely to succeed will not necessarily be those with the most accurate forecasts. They will be the ones that secure OEM capacity earlier, allocate inventory more effectively, maintain dealer trust, and continuously understand their emissions position.
Under NVES, competitive advantage increasingly belongs to organisations that influence vehicle mix earlier than their competitors. Because vehicle mix is rarely determined when a customer places an order. It is determined months earlier, when production capacity is secured and inventory is allocated. That is why vehicle mix is no longer simply a sales problem. It is an allocation problem.
This article continues Hicron’s After Round Table series, drawing on discussions from Hicron’s Automotive Round Table.
