Manufacturers and importers are getting set to share in a $A1 billion sales bonanza
following an election year tax back-flip by the Australian federal government,
writes Mike Duffy.

The boost in demand for cars, light commercials and trucks is expected to flow
from a drag-forward of a two-stage goods and services tax (GST) input benefit
for business buyers.

The Federal Chamber of Automotive Industries estimates an additional 40,000
vehicles, valued at $A1 billion, will be sold in the next 12 months as a result
of the change. The FCAI has adjusted upwards its estimate of vehicle sales for
calendar 2001 from 780,000 to 800,000.

If business confidence returns to the marketplace, the record of 807,669 vehicles
sold in 1998 could be under threat.

Business buyers were due to get 50 percent of GST input credits on vehicles
purchased after July 1 this year and full credits for vehicles bought after
July 1 2002.

the federal treasurer Peter Costello has decreed the GST will become fully mature
this July 1.

This means a company investing $A30,000 on a Holden Commodore, Ford Falcon,
Mitsubishi Magna or Toyota Camry will be $A3000 better off.

Buyers of heavy haulage trucks with $A300,000 price tags will be $A30,000 better

The vehicle industry has been lobbying the federal government for some time
through the FCAI and warning of a ‘buyer strike’ similar to the serious
disruption leading to the introduction of GST last July.

The Howard Liberal government is facing a voter backlash due to the inflationary
impact of the introduction of GST, soaring fuel prices and the falling value
of the Australian dollar.

It is anxious to win back lost support from corporate Australia and the back-flip
is seen as one of a number of election year cash-for-votes strategies.

Whatever the motive of the government, the car industry is jubilant about the

Corporate buyers who had served notice they would sit on the sidelines until
July 2002 are now asking manufacturers and distributors to talk business.

Many fleet managers who have taken a position not to replace fleets for another
year are expected to advance buying decisions.

The transport industry has reacted favourably and distributors of medium and
heavy trucks report an immediate and dramatic increase in inquiries from prospective

Mitsubishi Motors marketing manager Kevin Taylor said dealers were already
reporting a big boost in interest in fleet car sales.

dealers are monitoring a change in buying patterns,” he said.

“Fleet managers are anxious to talk business right now and that is very

A spokesperson for Holden, Amanda Webb, said many of its business customers
were bringing forward purchasing plans.

The four local car makers stand to gain most from the change in input benefits
– with Toyota, Mitsubishi and Ford in line for the biggest gains.

Holden’s Commodore range is the nation’s top seller, and its exports
to the Middle East and elsewhere are growing steadily. As a result, the car
maker’s Elizabeth, South Australia assembly lines can barely keep pace
with current demand.

There is no such shortage of cars produced by the three other local car makers
– hence the bias of benefit to Holden’s three competitors.

However, world car makers will share in the increase in sales.

While more than 60 percent of Australian-made vehicles traditionally go to
fleet users, including governments, local council and small business, a growing
number of Australian executives are on remuneration packages which allow them
to nominate their own vehicle.

Those ‘user-choosers’ are noted for their preference for European

* Author Mike Duffy is motoring editor of The Advertiser and the Sunday
Mail, Adelaide, Australia.

To view related research reports, please follow the
links below:-

b2b – Strategic threats and opportunities in the automotive supply chain

world’s car manufacturers: A financial and operating review