President's report
Welcome from the President
The past year was a busy and challenging period for the Australian automotive industry with many varied and rapidly changing issues competing for our attention.
In a testament to the resilient and competitive nature of the automotive industry, 1,012,164 new vehicles were sold in 2008. This was 3.6 per cent lower than the previous year.
Motorcycles maintained strong growth in 2008, reaching a new record sales figure of 134,112.
The 3.2 per cent increase over the previous record set in 2007 shows that increasing numbers of people are turning to motorcycles and scooters for their obvious convenience and efficiency.
Exports of Australian-made vehicles also reached a new record during 2008 with 163,718 fully assembled cars and Utes being sold overseas.
This 14.2 per cent increase on the 2007 figure is a clear indication that the local industry is producing world class cars in a highly competitive global market.
These are outstanding results when you consider that they were achieved during a period of significant economic uncertainty caused by the global financial crisis.
In 2008, the Australian Government completed a comprehensive Review of Australia’s Automotive Industry which sought to ensure a globally integrated and sustainable industry.
The FCAI was then at the forefront of negotiations and discussions with key Federal Government Minister’s and the Department of Innovation, Industry, Science and Research as the Government prepared its formal response to the Review.
A New Car Plan for a Greener Future announced by Prime Minister Kevin Rudd in November 2008 will help underpin future investment and innovation in the Australian automotive industry.
In particular, the Federal Government has recognised the opportunities that exist to encourage the future production of more environmentally-friendly vehicles in Australia through the expanded Green Car Innovation Fund.
This strong and progressive policy framework will stimulate what we have called a ‘decade of innovation’; providing added certainty and a clear direction for the industry. In return, the international parent companies of the three local manufacturers are committed to reinvesting in Australia.
The new arrangements have already provided immediate dividends with Ford, Holden and Toyota all making investment decisions in relation to new models or the future of plants as a direct result of these policies.
It is perhaps the clearest indication yet, that with industry and government working together, the Australian car industry can adapt, grow and remain a fundamental and very positive part of the national economy.
This was also illustrated in the Federal Government’s plan to give businesses a tax break when they invest in assets such as new vehicles.
Many businesses will be able to claim a tax deduction of up to 30 per cent of the cost of an eligible new vehicle purchased before 30 June.
We think this provides a strong incentive for businesses looking to update their fleet this financial year.
The Federal Budget handed down in May 2008 included an increase in the luxury car tax from 25 to 33 per cent.
This unexpected move was subsequently referred to the Senate Economics Committee for inquiry and the FCAI, on behalf of its members, made strong representations against the increase.
The increase was passed, with exemptions, and the FCAI worked to provide manufacturers, importers and dealers with the latest and most appropriate advice on how the new legislation should be implemented.
The FCAI spent a large part of the final quarter of 2008 dealing with and advising members about the impact the global financial crisis was expected to have on the Australian automotive industry.
The withdrawal of two major showroom financiers prompted the FCAI to make immediate representations to Treasury about the impact this would have on the automotive industry and the wider economy.
The establishment of a Special Purpose Vehicle to assist dealers unable to source an alternative credit provider was timely and welcomed by the industry.
Demand for new vehicles slowed in the final months of 2008 as the impact of the global financial crisis spread through the wider economy.
Importers and manufacturers responded to the changing marketplace, with many brands offering very competitive opportunities to new vehicle buyers and others were prompted to examine their future business planning.
All vehicle brands spent the end of 2008 preparing for the year ahead and working on strategies to deal with the ongoing global recession.
On the safety front, motorists and the industry were quickly embracing lifesaving Electronic Stability Control (ESC) systems.
The combined proportion of passenger cars and Sports Utility Vehicles with ESC as standard equipment in 2008 had grown to 57.7 per cent.
At the end of 2008 the Australian Government released a Regulatory Impact Statement to consider the introduction of an Australian Design Rule (ADR) for the mandatory fitting of ESC to all vehicles up to 4.5 tonnes.
The FCAI supported the adoption of an ADR requiring ESC on passenger cars, aligned with the timetable for the introduction of similar regulations in Europe.
Looking to the year ahead there are a number of issues on the horizon for the Australian automotive industry.
Preparations are underway for the FCAI’s submission to the Review of Australia’s Future Tax System, to be carried out by Treasury Secretary Ken Henry.
The FCAI will recommend that the Review examine two particular measures relating to motor vehicles – Fringe Benefits Tax (FBT) and the Luxury Car Tax (LCT).
The FCAI will submit that the LCT should be abolished and that the Review should undertake a detailed analysis of the impact of the current FBT Statutory Formula on vehicle use and to evaluate a range of policy options compared with the status quo.
The FCAI, on behalf of its members, again staged the Australian International Motor Show (AIMS) in Sydney during October 2008.
More than 400 vehicles were displayed with more than forty of them new to the market. The event included half a dozen concept cars and at least three world premieres.
The motor show was conducted in challenging circumstances.
At the time of the event the global financial crisis was emerging and the growing economic uncertainty contributed to a lower than expected attendance figure.
The FCAI was already investigating the future direction of motor shows in Australia in an attempt to find a sustainable model that met the new demands of vehicle brands.
The FCAI undertook discussions with the organiser of the Melbourne International Motor Show, the Victorian Automobile Chamber of Commerce (VACC), on the development of an agreement for the joint staging of future the motor shows in Australia.
In summary, it has been a challenging year for the Australian automotive industry and the outlook is one that will present us even more challenges.
But it is not the time to give in. It’s important to remember that we've been through challenging times before and emerged stronger.
Just how we react to our latest set of circumstances will define us as an industry.
We have been given clear direction from the Government to innovate more and offer Australians greener cars.
It's time to break new ground.
I know I am part of an industry that can make that happen.
Mark Reuss
President
8th April 2009