Back to a million in 2011?

Australian new-car sales will be in a holding pattern this year, says Toyota's Executive Director of Sales and Marketing, David Buttner.

Buttner (pictured), speaking to the media yesterday, forecast "a year of consolidation" in 2010 and went on to say that the year had kicked off on a positive note.

"The reduced tariff on passenger vehicles that came into force on January the 1st, has generally brought a mixture of lower prices and/or increased equipment," he explained. "And of course, that will help to stimulate sales."

"We expect the economy to continue its gradual improvement... The Australian sharemarket yesterday [January 4] hit a 15-month high, its best since September 2008.

"Toyota's full-year forecast is for an industry total similar to or slightly better than the 2009 result.

"It is clear that the underlying level of demand in 2010 will continue to be strong. The pace of growth should pick up over time and we're expecting the industry to return to that magic million by 2011."

Buttner had earlier alluded to his forecast 12 months ago for a 2009 market tally of 880,000 units for the year, so despite being 'critiqued' at the time for an unjustifiably positive outlook, his estimate was closer than that of many in the industry. Nevertheless, he did not foresee the impact of the investment allowances introduced by the federal government during the year.

Nor did many in the industry. As recently as mid-November, Ford President Marin Burela was predicting a total market between 920,000 and 930,000 -- and Burela is a self-confessed "glass half-full" sort of bloke. Yet, even he underestimated the final figure, which reached 937,328 for the year, as per VFACTS.

The two investment allowances (particularly the later small-business allowance) were the primary factors influencing the market during the latter half of 2009. Restricted by a December 31 deadline for ordering, the small-business allowance contributed in a meaningful way to the 88,708 sales in December -- nearly 12,000 more than in December 2008.

According to Buttner, it will continue to impact on sales during the early months of 2010, which is part of the reason the Toyota exec reckons that 2010 will culminate in similar sales figures as for 2009. The incentive is past, but its ripple effects will continue to push sales as importers and manufacturers source supply to meet the demand fostered during the latter months of last year. That said, the ripple will diminish, but the economy should be able to pick itself up by its bootstraps subsequently.

Some of that will be due to the recovery of the mining industry. With China's GDP nearly back to "double-digit growth" after a 'disastrous' slump to all of six per cent, there'll be more call for commodities exports during 2010 -- and that will bolster the purchase of new commercial vehicles and SUVs. Buttner says that sales of the LCVs improved by 19.3 per cent between 2008 and 2009, with SUVs lifting 20.1 per cent for the same period.

Whatever happens with passenger-car sales during 2010, the market will continue to be pushed along by sales of LCVs and SUVs. And according to Buttner, there's more profit in them thar commercials than in passenger vehicles.

Another point made by Buttner is that some of our trading partners are now beginning to emerge from the worst of the Global Financial Crisis, so exports from our local manufacturers will begin to pick up once more. That has zero effect on domestic sales, other than improving profitability for the manufacturer, with the possibility that will trickle down to local retail buyers in the form of discounted pricing. The situation there is much clearer if you're buying an imported passenger vehicle, which will either be priced lower or feature more equipment as standard -- thanks to the tariff reduction with effect from January 1.

In other words, the positive portents for 2010 outnumber the negatives.

To illustrate how timely and efficacious the incentives were, Buttner trotted out average sales figures for the months of January to May '09 (70,475) and June to December '09 (83,565). Plainly, there was something else at play other than the usual end of financial year incentives.

But it wasn't all just the government's intervention. Buttner cited consumer confidence, readily obtainable credit, stable (lower) fuel prices and steady (low) interest rates as factors in the industry's relatively strong showing for the year.

There was, of course, one other consideration in the positive result for the year: the tactics employed by the industry itself, adding value to the product for the consumer. That was either by equipping cars with added features, reducing the price or offering some other incentive to buy -- and the Australian buying public responded in droves.

However, Buttner said that Toyota had not condescended to some of the price-slashing activities of its competitors during the year. That would "kill the residual", he told the Carsales Network. And although he didn't care to comment on Mazda's strategy of buying market share while the market is depressed, he couldn't see it as an option for Toyota.

"How do you sustain that?" he asked. "You still have to make money..."

Read the latest Carsales Network news and reviews on your mobile, iPhone or PDA at www.carsales.mobi