Abstract
The effects of a new tax on luxury vehicles, introduced in August, are
becoming apparent as Australia' s
new vehicle market continues on the
downward trend started in 2008. An 18.5% drop in sales in January,
followed by a 22% decline the following month, took sales for the first two
months combined to their
lowest level in seven years. BMI' s latest
Australia Automotives Report notes that the decline in February
was most
prominent in the larger vehicle segments covered by the new tax, with sales of
large cars down
by 23.4% year-on-year (y-o-y) and also down 53.1% y-o-y in
the upper large segment. Sales for every
category of sports utility
vehicle (SUV) were down, ranging from a decline of 11.8% for luxury
versions
to 48.6% for large models.
Chief Executive Andrew McKellar of
the Federal Chamber of Automotive Industries (FCAI) believes
there is hope
in the form of tax breaks for businesses acquiring new assets before June 30.
Businesses
could be eligible for a reduction of up to 30% off prices under
the government' s stimulus plans aimed at
encouraging spending and
investment. However, BMI has revised down its sales forecast for the year
to
reflect a 15% contraction to around 855,000 units. While we believe
that such stimulus packages will go
some way to preventing a total
collapse, domestic demand will still be weakened by the slowing
economy.
In BMI' s Business Environment Ratings for the Asia Pacific,
Australia ranks second to China with a
slightly lower score of 65.3 (out
of a possible 100) compared with 65.5 in the previous quarter. The
developed nature of the country means that Australia is at a disadvantage, as
the market' s near-saturation
reduces its growth potential. On the other
hand, a high GDP increases purchasing power, while market
risks are
reduced by low levels of corruption and a strong legal framework. This is
reflected in the high
score for its low risk to realisation of
returns.
Maintaining the positive trend of greater market share for the
domestic producers, Toyota Motor retained
the lead of the overall market
in February, selling 14,274 units for a market share of 20.3%. GM Holden
remained some way back with sales of 9,029 units to claim 12.9% of the market,
while Ford Motor sold
7,396 units for a market share of 10.5%. However,
this does represent a slight decline in combined market
share for
domestically-produced brands, which accounted for 43.7% of the market in
February compared
with 46.7% in the whole of 2008.
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