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AADA-MIA outline govt measures to assist industry

Alarming: AADA CEO James Voortman has described the April sales drop as alarming and said more needs to be done by the government.

Trans-Tasman industry bodies list incentive measures to help industry survive COVID-19

7 May 2020

INDUSTRY on both sides of the Tasman have called on their governments for incentives to boost vehicle sales as the April new-car market slumped to a record monthly low.


Australian new-car data showed the number of vehicles sold in April fell under 40,000 units, the lowest monthly sales recorded, while in New Zealand, dealerships were open only three days in April for contactless sales and service and sales plunged 90 per cent to 9601 units.


The Australian Automotive Dealer Association (AADA) called the drop in April “alarming” and its CEO, James Voortman, said the reduced sales were attributed to restrictions related to COVID-19 and associated “economic anxiety”.


“The effect of these figures on the wider economy should not be underestimated. Passenger cars is Australia’s third biggest import; the industry contributes almost $13 billion to the economy; and dealerships employ nearly 60,000 jobs in cities and country towns across the nation,” he said.


“Outside of dealerships, new car sales support so many businesses ranging from those involved in shipping and distribution of cars, finance and insurance products, aftermarket accessories, servicing and repair, and many more.”


He said the AADA proposed five key measures for the government to consider to help the automotive industry.


These are the $150,000 instant asset write off – that the AADA said should be extended beyond June 30 – and the car limit applying to that write off should be removed.


“There is simply no rationale for treating cars differently to other assets,” Mr Voortman said.


The government should also consider ways to incentivise the renewal of Australia’s car fleet to “assist the uptake of newer, safer and lower emitting cars.” 


In its request to the government, the AADA said ANCAP reports that vehicles built before the year 2000 represent only 20 per cent of the fleet but are involved in nearly one-third of fatal crashes.


“AAA research has shown that lowering the average age of Australia’s light vehicle fleet by one year would save up to 1377 lives, creating a $19.7 billion benefit in trauma and emission reductions over a 20-year period,” Mr Voortman said.


“In terms of efficiency, a 2016 fuel efficiency study found that vehicle efficiency improved by 76 per cent from 2005 to 2015.”


The AADA is also calling for credit to be freed up to address the tightening of credit brought on by the royal commission and compounded by the COVID-19 crisis.


“If credit is not freed up, this recovery will not happen,” Mr Voortman said.


The AADA also said now was the time for taxation on motor vehicles by federal and state governments “to be urgently reviewed”. 


Mr Voortman said many of the federal taxes were acting as a disincentive for motorists to buy safer and cleaner vehicles or equip them with safety accessories while at the state level, luxury stamp duties (Victoria and Queensland) were driving up the cost of the safest and most fuel-efficient vehicles.


The AADA also sees a need for a review of the dealer franchising code that provides a balance between automotive manufacturers and dealers. 


It said that this would enable dealers to “right size” their businesses in the prevailing market and remove the unfair and onerous obligations placed upon them by many of the manufacturers.


In New Zealand, the Motor Industry Association (MIA) reported that moving from a COVID-19 Level 4 (full lockdown) to Level 3 on April 28 still didn’t mean it was business as usual for the country’s car dealers.


MIA chief executive David Crawford said Level 3 was seen as a “careful step” towards restarting businesses.


He has called on the NZ government to now kick-start the new-car market and lessen the “economic pain” of businesses.


The MIA has proposed three main stimuli to reboot the automotive industry. 


It said the NZ government should accelerate the uptake of plug-in vehicles across the government fleet. 


“To date, uptake of plug-in vehicles by government agencies has been less than modest at best,’ the MIA said.


It proposes that the government increase departmental votes (budgets) to permit departments to increase their uprate of battery-electric vehicles and plug-in hybrid vehicles.


Also, the MIA said that prior to the pandemic, it supported in principle the adoption of a feebate (low-emission car) scheme where high-emission cars attract higher government charges. 


Now it says that the degree of fiscal impact of the pandemic needs an immediate review of this policy and government should defer the introduction of the feebate scheme and instead provide incentives for fuel-efficient vehicles, to be reviewed in 2023.


The third issue is that vehicle scrappage should be placed on the government agenda with financial incentives to remove vehicles which are older than 20 years of age and/or where their exhaust emissions standards are the equivalent of Euro3 or less.


“This would also be in line with the new road safety strategy and the government’s climate change objectives,” the MIA said. 

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