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Small-business tax breaks ripple on in Australia’s new-car market in 2010

General News logo10 May 2010

THE federal government’s 50 per cent tax break for small business may have officially ended on December 31, but the after-effects continue to have a significant positive impact on Australia’s new-car market.

A boom in deliveries of business vehicles ordered late last year has contributed a large slice of the solid 20 per cent increase in overall sales growth so far in 2010, following a 27 per cent sales surge across the board in April.

With the growth in sales to private customers finally outstripping business vehicles sales growth last month as the effects of the global financial crisis begin to wane, however, the direct effects of the Rudd government capital expenditure stimulus are best measured over the last three months of 2009 and the first three months of 2010.

In that period fleet or business vehicles sales were up 37.7 per cent and sales to rental companies were up 46.5 per cent – well up on the growth in private sales at just 7.4 per cent and overall sales growth at 15.2 per cent.

Mazda Australia managing director Doug Dickson, whose company’s fortunes are closely linked to sales to private customers, is clear about where much of the 2010 sales boom has come from.

“The tax breaks started to take affect in October and were still going strongly out to March, which has distorted the market as the GFC starts to recede into memory,” he said at last week’s Mazda2 launch.

“In the six months to March private sales increased by only half of the total (sales increase), while fleet sales increased by more than double. That is the result of the tax break.

 center imageFrom top: Holden Colorado, Toyota HiLux and Holden Commodore.

“Large fleet and government sales were down because the tax breaks didn’t target them. In the last three months private sales are up 18 per cent, but that’s still only half the increase of the overall market, while fleet is double, large fleet is off and government is simply not there.

“Looking at which segments benefitted most, as you can well image it is one-tonne utilities and SUVs that have benefitted most from the small-business tax break.

“On the other hand the small and light segments, which are principally private buyer territories, have not increased and large and medium are probably more larger fleet purchasers, so utes and SUVs have been the biggest beneficiaries.”

In 2010, sales of passengers cars are up 17.3 per cent thanks largely to an 18.9 per cent lift in business sales (while private sales rose by 10.6 per cent). Meantime, SUV sales are up 35.2 per cent – led by business sales (up 44.6 per cent) rather than private sales (up 27.2 per cent).

Same goes for the light commercial segment overall, which is up 15 per cent so far this year following a 17.5 per cent increase in business sales and an 8.2 per cent lift in private salesToyota’s HiLux continues to reap the Rudd government’s tax rewards by finding more than 3400 homes in April – 250 more than any other vehicle, including Australia’s top-selling model for 13 years, the Holden Commodore.

HiLux 4x2 sales lifted by 15 per cent last month to be up 21 per cent for the year, while HiLux 4x4 sales surged more than 40 per cent to be nearly 23 per cent ahead on the same period in 2009.

The HiLux is the only ute to top Australia’s monthly sales charts and April was the fifth time it did so – after being the nation’s most popular new-vehicle purchase in June and November last year, as well as in April and October 2008.

Sales of other utilities tell a similar story, with total 4x2 sales increasing just 2.6 per cent last month while 4x4 ute sales lifted 26.3 per cent, indicating that most of the sales growth has been fuelled by work vehicles that are also employed for recreational activities.

Sales of all mainstream 4x4 utes were up in April, including Nissan’s Navara (up just 1.2 per cent), Ford’s Ranger and Holden’s Colorado (both up 14 per cent), Nissan’s Patrol (up 17.5 per cent), Mitsubishi’s Triton (up 21 per cent), Mazda’s BT-50 (up 28 per cent), Toyota’s LandCruiser (up 44 per cent), Isuzu’s D-Max (up a massive 186 per cent) and Land Rover’s Defender (up no less than 500 per cent).

In year-to-date terms the business vehicle sales increase over 2009 stands at 23.7 per cent or some 25,100 extra vehicles, while private vehicle sales have increased by just 19,300 sales or 14 per cent.

Overall, there were 9500 (or 32.6 per cent) more private buyers in the market in April compared with the same month last year, while sales to business buyers lifted by 4572 vehicles or 17.1 per cent last month, making it the seventh consecutive month of sales growth since the GFC struck in mid-2008.

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