Fast Market Research recommends "Australia Autos Report Q4 2013" from Business Monitor International, now available

Boston, MA -- (SBWire) -- 10/02/2013 --New vehicle sales in Australia were up by 4.6% over the first seven months of 2013, at 663,496 units. However, breaking down the headline figure reveals a mixed picture, with passenger car sales broadly flat (down by 0.4% year-on-year (y-o-y), at 327,531), but SUV and commercial vehicle sales performing strongly. Indeed, SUV sales were up by 10.3% y-o-y, at 196,107 units, while LCV sales rose by 10.4%, to 122,039 units and HCV sales increased by 5.4%, at 18,269 units. Encouragingly for the industry, July monthly sales were at an all-time high, according to the FCAI.

Looking forward, much will depend on the outcome of Australia's general election on September 7 2013. At the present time, the opposition Liberal/National coalition looks on course for victory, which could lead to some changes in government policy towards the auto industry.

On the positive side, opposition leader Tony Abbott has said that he would scrap recently announced changes to the country's fringe benefit tax, which would require owners of company cars have to fill out logbooks detailing their personal and business use of their cars. Previously, it has been accepted that owners of company cars only have to declare 20% personal use of these cars.

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The FCAI had decried the move, saying that it would have 'dire consequences for Australia's vehicle industry, both locally-made and imported'. It was also concerned that the Rudd government had announced this tax change without consulting the industry.

However, although a new Liberal-led government might scrap these tax changes, which would impact severely on corporate demand for new vehicles if introduced, there are indications that the Liberals will be less willing than Labor to carry on giving out generous subsidies to ensure the continuation of auto production in Australia.

Tony Abbott has already said that he would cut some AUD500mn in current subsidies to the auto industry, with GM Holden CEO Mike Devereux having said that the company will decide after the election as to whether it can continue to manufacture cars in Australia.

Although Prime Minister Kevin Rudd has pledged increased financial support for the industry while on the campaign trail, promising that an extra AUD500mn will be made available for local carmakers from 2016-2020, with an additional AUD300mn per annum promised on an ongoing basis from 2020, it appears increasingly likely he will no longer be in power after September, which is why large carmakers are reassessing their commitment to local production in the event of an opposition win.

Against this uncertain backdrop, BMI is maintaining its current sales and production forecasts this quarter, but we will revisit these numbers after the election to see if any changes to our forecasts become necessary following a likely change of government in Canberra.

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