Archive for November, 2008
At last some good news to report for the Australian car industry!
Kevin Rudd announced today a $6 billion package to safeguard the car industry in Australia. Whilst significant assistance was expected following the Bracks review, the size of this ‘bailout’ has come as quite a surprise to many industry experts.
The package, intended to stem further job losses in manufacturing as well as steer the industry towards a more eco-friendly and sustainable future has won support from unions, car makers and consumers across the country.
Here are the key points:
- $3.4 billion assistance program from 2011 to 2020;
- $79.6 million to the Automotive Competitiveness and Investment Scheme to smooth the transition to a greener automotive industry;
- $116.3 million to improve competitiveness in the automotive component manufacturing sector;
- $20 million from 2009-10 to help suppliers improve their supply chains;
- $6.3 million from 2009-10 for an enhanced market access program;
- A new Automotive Industry Innovation Council comprising key industry decision makers to drive innovation and reform; and,
- An immediate $10.5 million expansion of the LPG vehicle scheme that doubles payments to purchasers of new vehicles using LPG technology.
Importantly Rudd has confirmed that the planned reduction in the automotive tarrifs from 10% to 5% will go ahead in 2010 which is fantastic news for Australian car buyers.
Well figures released today confirm what most in the industry had been expecting. A big fall in new vehicle sales for October.
Precisely 79,105 new vehicles were delivered in October down 11.4% on the year below. Year to date, sales are down just 0.9% compared with this time in 2007. Of course we all know why the sudden drop – the global economic downturn is making Australians have second thoughts before making such a purchase.
It’s interesting to ponder whether people are forgoing these purchases because they actually have less cash to spend or is it the fear of what the future holds that is keeping them back. I suspect it’s the latter more than anything which is a worry in itself as every industry suffers when confidence is stripped back.
I doubt next month’s figures are going to look all that much better either. Interest rate cuts should help in some ways but it’s important to remember that with new vehicle sales, deliveries are (on average) usually around a month or so from the order. So October’s figures really represent many commitments that buyers made in September. So there could be more bad news to report this time next month.
The irony is, however that due to this fear & falling profits manufacturers and dealers are keener than ever to move stock and as such we’ve been seeing some pretty unusual levels of discounting. In fact, you could say it’s a buyer’s market out there after all.