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Ford plans more factory downtime

Slumped: The venerable Ford Falcon suffered its worst ever sales month in July.

Shutdown backlash, FBT hit force Ford to consider more Falcon production cuts

6 Aug 2013

FORD is considering more production cuts at its Broadmeadows factory as a buyer backlash relating to its decision to close down its manufacturing operations in Australia in 2016 rumbles through showrooms.

However, Ford Australia has also pinned the sales slump on proposed changes to fringe benefits tax laws that will make it more expensive for people to own a Falcon or Territory if they lease it or attempt to sacrifice part of their tax-free income.

According to Ford Australia public affairs director Sinead Phipps, the car-maker has seen a significant drop in sales since the July 16 announcement that the FBT laws would change – despite both Toyota and Holden saying the full impact is yet to hit.

The revelation comes as industry figures released this week show that the Broadmeadows-based car-maker sold only 594 Falcon family sedans in July – its worst result ever in the car’s 50-year-plus history – as sales slumped by almost 40 per cent compared with the same month last year.

“Everybody seems to be holding off at the moment on forward orders, so we’ve made the decision that we need to take some production out in August and September,” Ms Phipps told GoAuto.

“We’ve flagged that we may need some more in (the fourth quarter) as well, but we’ll wait until closer to the time to confirm that.”

Asked if Falcon production at Broadmeadows could be cut, Ms Phipps said everything was on the table.

“We’re managing it via down days at the moment,” she said. “We have no plans to do anything different at this stage, but if it was to be a long-term, consistent downturn we may have to look at something else.”

According to Ford, changed conditions that workers can expect include pay cuts to about 50 per cent, as well as drawing on annual leave and sick leave entitlements.

Ms Phipps conceded that some of the downturn in the Falcon’s fortunes could be attributed to Ford’s decision to quit its Australian car-making business in late 2016.

“That’s probably a factor, and that’s why we have to remind everyone that we have a new one (a facelifted version of the Falcon) coming next year, and remind them that the current car is still competitive, and holds its own against VF (Commodore),” she said.

Holden last month released a significantly updated version of its Commodore large car range, including an overhauled interior featuring cutting-edge in-car technology that will even allow users to stream audio from the internet while they travel.

Ms Phipps said this would be buoying Commodore sales compared with that of its Falcon rival.

“It could be that they’re (Holden) protected a little by that, while we have to wait until next year to launch our new car,” Ms Phipps said.

“So we just have to do what we can and manage our production to what is the realistic demand.”

She said the car-maker was confident that it could keep producing its large car here until its 2016 deadline.

“Falcon is still here and will stay here for some time yet,” she said.

Both Holden, which makes its Commodore and Cruze range in Adelaide, and Toyota, which makes its Camry, Camry Hybrid and Aurion in Melbourne, told GoAuto that the fallout from the FBT changes was yet to make its full mark on sales.

“We didn’t see a significant impact in July sales as we experienced strong deliveries at the beginning of the month, driven by the new VF,” Holden senior manager of public relations and technology communications Andrea Matthews said.

“There has been a reduction in vehicle orders and we do believe that the FBT changes will significantly impact the market, and are assessing this impact on a daily basis.”

Toyota was also waiting for the full impact of the planned tax law changes to hit.

“The proposed FBT changes will have a significant impact on our sales, the full effect which will be seen over the coming months,” Toyota media and external affairs manager Beck Angel said.

As well as highlighting the Falcon sedan’s ongoing struggle, this week’s VFACTS data shows that sales of the Falcon utility were down 10.6 per cent last month to 355 units, while the Territory was similarly down 10.9 per cent to 966.

Ford’s locally built sales overall were down 20.9 per cent in July, deepening its year-to-date decline in Broadmeadows-built models which currently stands at 14.7 per cent.

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