rudd plunging aust into recession?

Fleet orders into reverse as FBT changes start to take a toll

ORDERS to fleet leasing companies slumped by a massive 26 per cent from July to August - and locally-made cars from Holden, Ford and Toyota were hit hardest of all, down by a staggering 30 per cent.

Figures to be released on Wednesday by the Federal Chamber of Automotive Industries are expected to show a slowdown in the number of vehicles reported as sold in August - a stark contrast to the 5 per cent growth in the first half of the year, an all-time high.

However, confidential fleet industry figures on forward orders provide a clearer insight into the sales downturn expected in the coming months.

A survey of nine of Australia's biggest fleet leasing companies - which typically write orders for more than 100,000 new vehicles a year, about 10 per cent of the entire new-car market - found that forward orders fell from 8700 in July to 6480 in August, a drop of 26 per cent.

Significantly, orders for locally-made cars from Holden, Ford and Toyota slumped by 30 per cent, the survey found (from 1650 in July to 1160 in August).

"This is only the start of the deterioration," said John Bills, the executive officer of the Australian Fleet Lessors Association (AFLA), which compiled the survey.

"Our forward orders show there is a dramatic downturn coming."

The insight from fleet companies came as Opposition Leader Tony Abbott and Shadow Treasurer Joe Hockey distributed an open letter to the industry which said, in part, "rest assured that if we are elected, Labor's FBT changes will be null and void" and the Coalition "wants confidence to return to Australia's car sector".

Official sales figures released on Wednesday are expected to show Ford was down 20 per cent and Holden slumped by 6 per cent in August.

Even juggernaut Toyota - market leader for the past 10 years - dipped by 1 per cent in a market that had been climbing prior to the Rudd Government's July announcement about changes to Fringe Benefits Tax rules on company cars.

"The official new-car sales figures for August show a slowdown but even then they won't fully reflect the real impact of the changes to the Fringe Benefits Tax," said Mr Bills.

"The data vividly demonstrates the unfortunate consequences (of the FBT changes).

"This alarming reduction in business is attributable to the removal of the statutory formula option. It has had a serious immediate impact on business in this industry sector with devastating consequences for those suffering loss of employment. Further job losses are inevitable if this measure proceeds."

The car industry has been calling for a reversal of the controversial changes to the FBT rules on personal use of company cars ever since the Rudd Government made the announcement on July 16.

The changes were supposed to help raise $1.8 billion towards the scrapping of the carbon tax.

But it has since emerged Treasury and the Government had not done a proper analysis on the impacts of the changes - and it now seems likely it wouldn't raise the forecast $1.8 billion as buyers defer purchases or purchase cars through schemes not subject to FBT.

The industry says if the FBT overhaul is not reversed it will dent new-car sales by 10 per cent over a full year and lead to thousands of job losses in automotive retail industries as well as manufacturing.

http://www.dailytelegraph.com.au/business/companies/fleet-orders-into-reverse-as-fbt-changes-start-to-take-a-toll/story-fni0d54u-1226710054755