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The year of the fightback

Comeback: The Australian motor industry went into 2009 under a cloud and emerged in the sun.

In 2009, new-car calamity turned into opportunity for many as Canberra kicked in

General News logo12 Jan 2010

OFFICIALLY, the 2009 Australian new-vehicle market was down 7.4 per cent on the previous year, breasting the tape at 937,328 units.

But by some guesstimates, the federal government’s financial incentives, including business tax depreciation breaks, were responsible for prompting about 80,000 sales, as tradies, farmers and assorted other ABN holders got in for their vehicular chop.

Without this Labor largesse, the figure may have looked something like 860,000 units, down about 15 per cent on 2008’s tally – or down more than 18 per cent on 2007’s record 1,049,982 units.

In fact, it could have been the leanest year since 2002, adding to the prevailing air of economic gloom in the wake of the global financial crisis, not to mention the jobless queues as low turnover bit both car-makers and dealers.

Instead, automotive sales turned out to be one of the feel-good stories of 2009, as car companies fought back to restore their equilibrium – if not entirely on the balance sheets then at least in their stock holding yards.

When GoAuto asked Toyota’s senior executive director of sales and marketing David Buttner how many cars Toyota Australia had on grass in the first half of 2009, he replied: “Too many”.

But by the close of the year, Toyota had not only cleared much of the backlog but was holding a record order bank – at least partly to cover pre-ordered vehicles by businesspeople trying to take advantage of the tax depreciation. Other companies are said to be in a similar position.

 center image Left: Toyota Australia senior executive director of sales and marketing David Buttner.

Mr Buttner said 2009 could be split into two: the first five months up to May, when the market was basically in freefall, crashing up to 20 per cent in some months, and post-May, when the incentives kicked in – boosted by an increase in the small-business tax break from 30 to 50 per cent – and consumer confidence started to creep back in.

A look at the monthly sales figures through 2009 shows the twin peaks caused by business buyer activity, around May-June – before the first incentive for all business closed on June 30 and after the announcement of the small business increase – and then again in November-December, as the tax breaks came to a screaming halt.

But the more heartening graph – the monthly year-to-date figure compared with the previous year’s YTD tally at that time – shows how the market fought back, month by month, from a deficit of more than 18 per cent in January, until it almost caught up with the previous year’s 12-month total, falling just 7.4 per cent short.

The question is whether it can continue this trend without artificial support into 2010.

Most crystal-ball gazers believe the market will basically flatline this year, perhaps kicking up in the second half to a small gain over 2009.

Although the industry expects that a pull-forward of business fleet vehicles due to the tax breaks in December will affect January and February sales, this will be mitigated by registrations held over by a percentage of these very same buyers, some of whom have delayed delivery because it suits them or because stock is short.

And then there is the tariff cut on imported passenger cars – at least those not shipped from duty-free countries such as Thailand and the US – that some (but not all) car importers have passed on to the consumer.

The real test might come in the second quarter when the industry tries to replicate the tax-break boom times of May-June …

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GoAutoNews is Australia’s number one automotive industry journal covering the latest news, future and new model releases, market trends, industry personnel movements, and international events.