Car sales plummet as boost from investment allowance fades

New vehicle sales dropped sharply in July as the temporary boost from the Federal Government’s special investment tax break faded.

Data from the Federal Chamber of Automotive Industries (FCAI) shows 75,333 passenger cars, SUVs and commercial vehicles were sold in July. That’s down 26.7% from June, and down 10.3% when compared to sales in July 2008.

June sales were heavily supported by the Federal Government’s special investment allowance, which allowed small companies to claim a tax break of 50% on assets over $1,000, and allowed large companies to get a tax break of 30% on assets over $10,0000.

While small businesses can access the tax break until the end of the year, the 30% allowance for large companies ended on 30 July (they can still claim a 10% allowance).

But despite the big drop in July sales, FCAI chief executive Andrew McKellar has remains upbeat, claiming that the industry is still enjoying a boost to car makers.

“There is evidence that there has been some flow-on from the very strong June sales result, particularly from buyers accessing the business tax break on new investments,” he says.

“Some brands are reporting that as a result of stronger sales in recent months they have supply constraints on certain models.”

So far this year 530,556 new vehicles have been sold, down 15.3% or 96,115 units compared to the same period last year.

Toyota retained its mantle of Australia’s best-selling car company in July with 16,664 vehicle sales, ahead of Holden with 10,266 and Ford with 7,783.