Stung by the global COVID-19 pandemic, Australia's vehicle market fell by more than 13 per cent last year, with total sales dipping below one million for the first time since 2007.
But the Federal Chamber of Automotive Industries says green shoots are appearing with growth in both November and December, pointing to a stronger result in 2021.
Chamber chief executive Tony Weber said while 2020 was clearly a "terrible" year with Australia hit by both a health and economic crisis, there were signs of recovery.
"The trend is looking good. So we're optimistic the market will bounce back as the economy will," he told reporters on Wednesday.
"I think it will be certainly north of where we are now and most probably over one million again, where it should be."
The FCAI said 916,968 new cars and trucks were sold last year, down 13.7 per cent on the 1,062,867 retailed in 2020.
But after 31 consecutive months of declining demand, sales grew by 12.4 per cent in November and then by 13.5 per cent in December compared to the same months the previous year.
That was a dramatic turnaround after sales fell 48.5 per cent in April and 35 per cent in May, as Australia endured the first wave of coronavirus cases.
A key feature of the market in 2020 was also the sharp rise in demand for electric or hybrid-electric cars.
The figures showed sales of pure electric vehicles grew by 16.2 per cent to 1769, while plug-in hybrids grew by 18.2 per cent to 1685.
While demand for non-plug-in hybrids, exploded by 93.7 per cent to 60,417.
"We see hybrid and plug-in hybrid vehicles as the natural progression for many to the adoption of fully electric vehicles," Mr Weber said.
"And these figures send a clear message that low-emission vehicles are on the way and are part of the future."
Toyota was the top-selling brand in 2020, leading the market for the 18th year in a row.
It's 204,801 vehicles put it well ahead of Mazda on 85,640 and Hyundai on 64,807.
The company also had the top-selling vehicle with demand for the HiLux hitting 45,176 ahead of the Ford Ranger on 40,973 and the Toyota Rav4 on 38,537.
Departing car company Holden sold just 16,688 vehicles in 2020 after General Motors announced its decision to axe the brand early in the year.
Toyota's sales and marketing boss Sean Hanley said while 2020 had been an incredibly challenging year and the company's sales had fallen marginally, it still managed to retail more than 200,000 vehicles, something it had achieved in each of the past nine years.
But he said its most impressive result was the sale of more than 54,000 hybrid vehicles, which would collectively save their owners more than $20 million at the petrol pump and cut emissions by 35,000 tonnes in a single year.
"That's how you have an impact on the environment," he said.
"By selling tens of thousands of electrified vehicles that use less fuel and have lower emissions than conventional petrol vehicles of a similar size and performance."
