Oz Auto Makers Blame Labor Government for August Sales Drop

Just days before Australia’s federal election, the auto industry is blaming the embattled Labor government for the light-vehicles August sales drop, down 0.2% compared with year-ago, to 93,336 units.

The Federal Chamber of Automotive Industries says it expected last month’s deliveries to reach about 98,000 units based on year-to-date trends, with growth averaging 4.8% a month.

But the government abruptly changed the system for calculating the federal benefits tax (FBT) on vehicles used by employees for work and recreation, resulting in businesses rushing to cancel orders for lease vehicles because the paperwork now required in place of a flat rate is too time-consuming and costly.

New-car sales rose 3.5% in August to 48,060 units, pushing the 8-month total up 0.1% to 375,591. The SUV segment grew 4.3% to 27,515 vehicles, with the year-to-date total up 9.5% to 223,622.

Deliveries of light-commercial vehicles tumbled 16.3% in August to 15,262 units, leaving the 8-month total up 5.8% to 128,595.

“Unfortunately, but not unexpectedly, the FBT change is impacting on sales data,” FCAI CEO Tony Weber says in a statement. “This indicates consumers are having to stall or forgo their purchases of new vehicles.”

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

The industry is pinning its hopes on the opposition coalition, which is widely expected to win the Sept. 7 election. The coalition says it does not support the FBT changes and will not pursue the measure if elected.

The FCAI data shows business-vehicle purchases dropped 10% in August compared with year-ago, with orders for LCVs alone down 23.4%. Government purchases of LCVs fell 7.8%.

The Victoria Automotive Chamber of Commerce says the latest figures from the Australian Automobile Dealers Assn.’s survey of new-car dealers shows 64.6% of respondents expect to make job cuts.

The survey found 78.6% of respondents reported the FBT changes had resulted in canceled or postponed orders. “There are reports that Ford and (GM) Holden have experienced a drop in sales for August of 20% and 6%, respectively,” VACC says in a statement.

“The Labor government’s decision to change a perfectly good system, without industry consultation, affects businesses, employees, the community and the economy,” VACC Executive Director David Purchase says.

The five best-selling brands last month were unchanged from July: Toyota was first with 17,758 units, ahead of GM Holden (10,606), Mazda (9,825), Hyundai (7,808) and Ford (6,222).

The Mazda3 was the top-selling vehicle for the month with 4,188 units, ahead of the Toyota Corolla (3,681), Toyota Hilux (2,884), Holden Commodore (2,809) and Hyundai i30 (2,552).

Toyota’s August deliveries took its 8-month total to 141,300 units, putting it on target for a full-year total well above 200,000.

Toyota Australia Sales and Marketing Executive Director Tony Cramb says the auto maker’s strong August result masks an underlying reduction in new orders from key customers, particularly fleets.

“There was further evidence in August of customers putting orders on ice ahead of the federal elections, due to the cloud over the potential FBT arrangements,” Cramb says in a statement. “At the same time…the industry is headed for a strong result in excess of 1 million sales this year.”

Mazda Australia saw a record August with 9,825 deliveries. The result also was the auto maker’s second-best ever monthly tally, earning it a 10.5% market share.

Mazda’s year-to-date sales of 70,637 units were good for a 9.3% share, consolidating the brand’s position as Australia's No.1 full-line importer.

Hyundai saw a record August with 7,808 deliveries, marking its 15th straight month of year-on-year growth. The auto maker finished the month in fourth place overall in the market, ahead of Ford, Mitsubishi and Nissan.

Mitsubishi enjoyed its best August result as a full-time importer in Australia, up 38% from prior-year to 5,626 units. Total sales surged 26% in the first eight months to 48,610.

Mitsubishi’s new-car sales jumped 50% to 1,891 units for the month, pushing its 8-month total up 39% to 15,337. SUV deliveries soared 71% to a record 2,364 for a year-to-date total up 11% to a record 16,851.

The Fiat Chrysler Group was in record territory with August sales up 17.4% to 3,401 vehicles, beating its previous record set in June by 503 units.

The group now has 28 straight months of year-on-year sales growth, driven primarily by Chrysler, Jeep and Dodge, but also underpinned by 10 consecutive months of improvement by the Fiat and Alfa Romeo brands, which have seen three months in a row of record volumes.

“Despite an extremely competitive marketplace, all six brands in the Fiat Chrysler Group stable have performed exceptionally well during August, posting a number of record results and generating continued growth for our business,” Fiat Chrysler Group Australia CEO Veronica Johns says in a statement.

Jeep delivered a record 2,045 units in August, while Fiat sold a record 591, marking the first time the Italian brand has exceeded 500 sales in a single month. Alfa Romeo hit its highest monthly total with 371.

In related industry news, Melbourne’s The Age newspaper reports Ford Australia workers could be forced to take pay cuts heading into Christmas after sales of the auto maker's locally made Falcon large car and Territory SUV failed to improve during August.

Ford Australia is halfway through a 12-day shutdown spread across August and September, and the newspaper says the auto maker is considering whether to schedule more down days at its Broadmeadows plant in the approach to Christmas.

“It is understood the federal election result on Saturday will be a key consideration,” the newspaper report says.