Ford Oz Blames Tax Change for Production Rollbacks

Ford Australia shutters its assembly plant for two days at the end of the week with media saying the auto maker blames the federal government’s changes to the fringe-benefits tax for lowering vehicle demand.

Ford Australia Public Affairs Director Sinead Phipps is quoted as saying production will be halted for 12 days over the next two months and six of those days are the result of the changes to FBT rules that require motorists claiming business use for vehicles to use logbooks rather than a statutory formula that calculates 20% of the car use as personal.

The 750 Ford production workers will get half pay for the down days.

Federal Industry Minister Kim Carr dismisses the link between Ford’s plant shutdowns and the FBT change. “Production of locally made cars has been low for some time, due largely to the impact of the high Australian dollar,” he tells reporters.

Ford’s sales of its locally built Falcon large car were just 594 units in July.

Roy Morgan Research reports long-term new-car buying intentions softened in July. It estimates 2,310,000 Australians intend to buy a new car in the next four years, a decrease of 16,000 since June.

“It seems the government’s recent changes to the FBT policy are already causing ripples,” the firm says in a statement.

Roy Morgan Research Automotive Account Director Jordan Pakes says the July sales slowdown followed a record start to the year.

“With the government’s July 16 announcement of changes to FBT deductions for vehicles likely to impact business and government vehicle sales, and fewer ‘private’ consumers in the market now than earlier in the year, it will be interesting to see if 2012’s sales record will be eclipsed in 2013,” he says.

Stirring the pot further, BMW Group Australia Managing Director Phil Horton says a win by the opposition Liberal Party coalition in the Sept. 7 federal election would doom GM Holden as an auto maker.

“With a coalition government, the writing is on the wall for Holden,” he tells Fairfax Media.

Horton says no matter which party wins the election, auto manufacturing in Australia probably is on borrowed time. A Liberal government would hasten the demise of the country’s oldest auto maker by refusing to provide the subsidies GM Holden would need to survive.

The ruling Labor government, however, is offering millions in new industry funding.

Nonpolitical factors also threaten local manufacturing.

“It makes no logical sense for Ford and Holden to have a manufacturing operation in a country like Australia,” Horton says. “There are some massive economic factors that you just can’t get away from. It’s a very expensive place for a worldwide car company to make cars.”