Automotive lobby claims FBT damage in car sales

Advertisement

I prefer to use the ABS car sales data and here is why:

The automotive industry took a hit in August with sales down 0.2 per cent compared to August last year. Only 93,336 vehicles were sold.

Prior to the Government’s 16 July FBT change, vehicle sales had increased, on average, by around 4.8 per cent each month, compared to the same periods from 2012. The Federal Chamber of Automotive Industries (FCAI) expected last month’s sales to be around 98,000 based on year-to-date trends, without the negative impact of the FBT change.

Releasing the August 2013 VFACTS data, FCAI Chief Executive Tony Weber said the disappointing sales figures show the impact the FBT change is having on the range of car brands in the Australian market.

“Unfortunately, but not unexpectedly, the FBT change is impacting on sales data. This indicates consumers are having to stall or forgo their purchases of new vehicles,” Mr Weber said.

“Without the return of the statutory formula method for salary-sacrificed and employer-provided cars, the FCAI and its members expect sales will continue to decrease through the rest of the year and into 2014, as the full impact on fleet sales works its way through the system.”

Business purchases are down 10 per cent compared to August 2012, with purchase of light commercials, in particular, down 23.4 per cent.

Government purchase of light commercials also fell 7.8 per cent, contributing to a total light commercial market drop of 15.3 per cent compared to the same period last year.

Government purchases of passenger vehicles and SUVs were low again, dropping 15.7 and 25.7 per cent respectively compared to August last year. Just 1,664 passenger vehicles and 676 SUVs were brought.

The Mazda3 was the top selling vehicle last month with 4,188 sold. The Toyota Corolla, came in second (3,681 units sold), the Toyota Hilux (2,884 units sold) followed in third, the Holden Commodore (2,809 units sold) came in fourth and the Hyundai I30 took fifth (2,552 units sold).

July’s top five selling brands held their position last month. Toyota held the top sales position in the August market with 17,758 vehicle sales, ahead of Holden (10,606), Mazda (9,825), Hyundai (7,808) and Ford (6,222).

ABS data shows that car sales peaked six months ago and up to July were in a oscillating sideways trend:

ScreenHunter_09-Aug.-19-11.37
Advertisement

There is not enough deviation from trend in the FCIA figures to make the claim that the FBT changes have hit sales (which doesn’t mean it isn’t true).

Stronger evidence is available in one specific category. From the AFR:

Ford Motor Company of Australia’s sales of locally-made cars fell 46.7 per cent in August, with Falcon sales plunging to 573 vehicles, a drop of 57.6 per cent – the lowest number since 1960, official data shows.

Sales of Australian-made cars fell 13 per cent in August compared with the same month last year, and were down nearly 20 per cent in the year-to-date, a result car makers blamed on Labor’s planned fringe benefits tax change.

The rapid drop caused Ford to halt production at its Broadmeadows assembly plant for 12 days over August and September to absorb the fall in demand.

Advertisement

That’s a deviation from trend!

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.