Australian Market Still Feeling Chill From Defunct Tax Plan

The Australian Labor government may be dead, but its now-abandoned auto tax policy is still infecting new vehicle sales.

For the third month in a row – since the tax announcement was made – new-vehicle deliveries declined, slipping 3.1% in October to 92,603 units. That followed drops of 2.1% in September and 0.2% in August.

New-car sales fell 4.6% in October to 46,939 units for a 10-month total down 0.8% to 469,679. Light-commercial deliveries slid 5.9% to 16,657 units, leaving the year-to-date total up 4.1% to 170,442.

The latest result lowered the overall market gain to 2.6% for the first 10 months, totaling 942,547 units.

Federal Chamber of Automotive Industries CEO Tony Weber says private sales last month rose 4.4% year-on-year, but business deliveries dropped 10.5% and government purchases fell 7.8%.

“The October data leads us to conclude there is still confusion in the market following the previous government’s FBT (fringe-benefits tax) proposal,” Weber says in a statement. “It is hard to have any other explanation for the 3.1% fall in the automotive market, particularly given a number of positive economic indicators across the broader economy in recent weeks.”

The Labor government plan would have required car owners to keep a logbook to differentiate between business and private travel and for employers to work out and collect tax on private use of the vehicles in a time-consuming and costly exercise. Previously employees could claim a flat 20% mileage rate.

Treasurer Joe Hockey reaffirmed the end of the FBT proposal and a continuation of the flat-rate policy today in a media conference and news release on tax measures.

Weber welcomes the confirmation.

“With the clarity this announcement gives to consumers, we expect car sales figures will increase in line with the trend in growth we were experiencing prior to the July 16 announcement,” he says.

Weber says sales of SUVs continued to rise – up 1.7% to 26,258 units year-on-year in October and ahead 8.1% year-to-date to 276,079.

Toyota topped the October market with 18,129 deliveries, ahead of GM Holden (10,528), Hyundai (8,130), Mazda (7,967) and Ford (7,486).

The Toyota Corolla was the best-selling car in October (3,861), followed by the Mazda3 (3,613) Holden Commodore (3,315), Toyota Hilux (3,172) and Hyundai i30 (2,379).

The Corolla has topped the national sales chart since May with deliveries exceeding 3,000 units for each of the past nine months, stretching its lead as Australia's best-selling car this year to more than 1,500 units.