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Ken Gratton3 Jul 2009
NEWS

VFACTS for June: Patchy growth signals improving business confidence

Based on the latest sales figures, fleets are re-entering the new-car market

Why is a 3.5 per cent sales deficit good news? Perhaps it's because each previous month this year has shown a shortfall of at least 14 per cent...


While analysts might dismiss the automotive industry's June sales in Australia as the by-product of government stimulus -- and an outcome which is unrepresentative of the way the market is faring -- the government itself favourably compares the local market with foreign markets.


"This strong outcome means Australian vehicle sales performance has exceeded sales in most other major economies. In June 2009, US sales fell by 27.7 per cent and Japan by 14.5 per cent," says Senator Kim Carr, Minister for Innovation, Industry, Science and Research.


At 3.5-per cent lower than for the same month last year (a record-breaking month in the prelude to the Global Financial Crisis), the June '09 result remains strong, but it hasn't been universally positive for all car companies and -- because of the nature of June sales -- July might yet slip back to 'recession' levels.


For the moment however, the Federal Chamber of Automotive Industries (FCAI) is upbeat about the June result and what it presages for the short term.


"The June results are encouraging and a positive sign for the new vehicle market and the Australian economy," FCAI Chief Executive Andrew McKellar said.


"This is the third highest selling month on-record and only the fourth time ever that sales have exceeded 100,000 units in a single month," he said.


In total, 102,847 new vehicles were sold during June. Of those, 46,679 were purchased by businesses. That represents a 12 per cent improvement on fleet purchases for the same month last year.


It's tempting to read this result as an effective end to the Global Financial Crisis scare that has overshadowed sales since July of last year, but fleet buyers may have come out in force for this month simply because they had to spend their budget for capital purchases ahead of the new financial year. And if some or many of them had been holding off buying for the preceding months, June was 'now or never'.


The FCAI credits the federal government's proactive sales stimulus for the gain in sales during June.


"The surge in business sales is directly attributed to the Federal Government's business tax break and these figures provide clear evidence that this has been a very effective policy measure," says McKellar.


"Our analysis indicates that the business tax break has led to an additional 10,000 vehicles being sold over the past three months.  That is a 10 to 12 per cent boost to business sales and a five per cent increase for the total market.


"This is additional turnover of between three-and-four-hundred million dollars that is providing a direct boost to the car industry as well as other local businesses throughout the Australian economy.


"The tax break is classic stimulus; it is giving businesses the confidence to invest in their own future and securing jobs in the industry."


Toyota was the top-selling company for the month, selling 21,410 units, followed by Holden on 12,167 units and Ford on 10,194. Curiously though, Toyota -- the company that depends highly on commercial vehicle sales -- sold 4214 units fewer than in June 2008. Holden sold 199 units more than in June last year and Ford's sales were just 92 units behind the June '08 volume. Individual companies enjoyed a real upswing for the month (more here).


Of the top ten importers and manufacturers, only Hyundai sold substantially higher volumes for the year to date. Hyundai's sales for 2009 amounted to 29,935 units, as opposed to 24,417 for 2008. In descending order for 2009, the top ten car companies were: Toyota, Holden, Ford, Mazda, Hyundai, Mitsubishi, Nissan, Honda, Subaru and Volkswagen.


The top-selling vehicles for June 2009 were:


Toyota HiLux 4756
Holden Commodore 4748
Toyota Corolla 4066
Mazda3 3741
Ford Falcon 3410
Mitsubishi Triton 3043
Hyundai i30 2742
Nissan Navara 2568
Hyundai Getz 2263
Toyota Yaris 2194


Despite the improving sales for June, the market is still 16.1 per cent down in year-to-date performance. Sales so far are no more than 455,223 and it's unlikely that the industry will be able to return to the record-breaking level of 2007 or even approach the million-plus sales of last year. But if the market is picking up in the latter half, it at least seems positive for 2010.


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Written byKen Gratton
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