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Business credit demand punctured
Tax incentive demise drives down business demand for vehicle credit in January
23 Feb 2010
BUSINESS credit demand slumped in January after the federal government's accelerated tax depreciation scheme finished on December 31.
Vehicle credit information provider VedaAuto, which measures credit demand data provided by more than 1600 companies, has revealed that requests for business car loans was down 40 per cent compared to a spike in December.
"The government scheme brought forward a large amount of demand and so it was not surprising that we saw that fall away in January," said VedaAuto spokesman Chris Gration.
While business vehicle credit demand dropped dramatically from December, January's result was not as bad at that figure might suggest. The business credit demand is 3.4 per cent up when compared with January 2009, in the middle of the global financial crisis.
Last month, personal vehicle credit demand was up 17 per cent compared with December and down 12.5 per cent compared with January 2009.
Mr Gration said it was possible that there could be some crossover from business to private credit demand now that the government incentive has been withdrawn, with some customers who may have bought a vehicle as a business asset now happy to buy it as a private purchase.
Despite the massive number of trade-ins flooding the market as businesses took advantage of the tax break, used-car credit demand dropped 12 per cent compared with December.
VedaAuto says used-car credit demand levels for the past 12 months were down 48 per cent on 2008 levels.
Mr Gration attributed this to new-car tax incentives and predicted the abundance of used cars entering the market at the end of last year would lead to a rebound in used-car enquiry.
"We do expect to see an increase in used-car credit demand,” he said. “There is a lot of good stock out there and it is a great time to buy a used car.”
Overall, vehicle credit demand for January was down 8.5 per cent compared to January 2009.
According to VFACTS, vehicle sales were up 11.6 per cent on January 2009.
Mr Gration said it was not yet possible to see what would happen with new-car sales and said it was too early to get a clear picture of the longer-term result of the government tax incentives.
"We really need another quarter of data to see what is happening," he said.
"It is unclear at this point whether we will see another acceleration or a flattening."
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