Bruce Newton•22 Jul 2013
NEWS
BMW dealer traffic plunges
FBT changes drive potential car buyers out of showroomsPotential BMW buyers have deserted its 42 dealerships in the wake of the federal government’s proposed motor vehicle fringe benefits tax changes and deputy prime minister Anthony Albanese’s accusation last week that BMW drivers 'fiddle the system'.
The company claims that floor traffic across the dealer network has dropped as much as 80 per cent, many new car orders had been put on-hold and some even cancelled.
The BMW experience of a downturn is not unique as potential new car buyers grapple with the implications of the government’s proposed changes, which are estimated to be worth $1.8 billion to the budget bottomline.
However, Albanese’s claim that BMW drivers are more likely than Holden drivers to be FBT fiddlers has drawn widespread accusations of class warfare while BMW has rejected what it calls “outrageous, offensive and untrue” accusations.
In effect, the government is trying to shut down the practice of individuals buying a car via salary sacrifice and claiming a concessional tax break, even though the 'company' car may be used for private purposes more often than the 20 per cent of the time permitted by the former statutory method of calculation.
The changes are opposed by the vehicle industry, the South Australian government and the federal opposition. For the changes to be introduced into parliament the Rudd Labor government has to be re-elected. Even then, unless it controls the Senate – which it almost certainly won’t – it will struggle to have the legislation passed.
The changes to FBT are part of a cash clawback prompted by the government’s decision to swap from a carbon tax to emissions trading scheme 12 months early, which it estimates will cost $3.8 billion in revenue.
The FBT changes, which will effectively make it more expensive for many people to purchase new cars, had resulted in some orders being cancelled and many being put on hold, BMW Australia sales and marketing general manager Tom Noble, told motoring.com.au during the 3 Series GT media launch over the weekend.
“Around 40 to 50 per cent of our business is novated at some level so what’s happened is people don’t know what to do,” Noble explained. “Even if they don’t have a novated lease right now the amount of media, the amount of coverage behind it has got everyone spooked.
“They are saying ‘heck I don’t want to buy a car right now because I don’t know what the government is going to do a year from now’.
“Our foot traffic has dropped 70 to 80 per cent across the dealers. This was as of Thursday-Friday we have seen it drop dramatically. We have had dealers have orders cancelled, or had orders put off.
“We have had dealers talking to customers who aren’t novated people trying to explain to them they are not affected. These are people who have considerable amount of money who are fairly sharp economically that still don’t really understand what the government’s plan is because it isn’t clear.
“The fact that the government can confuse people who are fairly intelligent and articulate … clearly shows the policy is not good, not well communicated and not well managed in the way it was rolled out.”
Noble said the slow-down in buying rates could lead to extensive discounting in the Australian new car market, although BMW would try to avoid that by offering dealers floor plan support if necessary.
Noble said the positive coming out of Albanese’s comment was that he was at least identifying BMW as the premium and luxury car market leader.
“It’s a tick on the brand awareness side of things,” he joked. “But to be honest I don’t think in his head there is a difference between a BMW driver, a Mercedes-Benz driver and an Audi driver in terms of fiddling with your FBT taxes.”
Noble made the point – as many in the automotive and leasing industry have – that the government’s attempt to portray the current FBT arrangements as a luxury car rort was inaccurate, as buyers who benefited most from salary sacrificing shopped in the $40,000-$80,000 bracket.
“The fact they have got it so wrong and they are actually hurting people who are buying $40,000 cars shows how clueless they are in how the automotive industry works and announcing policy without understanding the facts.
“We are somewhat insulated with wealthier buyers,” he added. “It’s really the guys below who are going to get smashed.”
Noble said BMW’s preferences were for less taxes on vehicles rather than more – a stance he admitted was unlikely to bear fruit – or failing that, a tax structure that encouraged the introduction of new technologies and lower emission vehicles.
“Give us a reason to invest billions of dollars to make cars more fuel efficient because that’s what it takes to turn these things. So if it’s a tax that has something to do with carbon emissions well then it should have something to do with carbon emissions and providing a benefit to those who reduce carbon emissions.”
BMW has driven down fuel consumption and emissions levels across its range via its Efficient Dynamics program since 2007. It will introduce its first front-wheel drive small car and the ‘i’ electric vehicle range in 2014.
Read the latest news and reviews on your mobile, iPhone or PDA at carsales' mobile site...
Tags
BMW
Car News
Written byBruce Newton
Our team of independent expert car reviewers and journalists
Related articles
Disclaimer
Please see our Editorial Guidelines & Code of Ethics (including for more information about sponsored content and paid events). The information published on this website is of a general nature only and doesn’t consider your particular circumstances or needs.
Please see our Editorial Guidelines & Code of Ethics (including for more information about sponsored content and paid events). The information published on this website is of a general nature only and doesn’t consider your particular circumstances or needs.
Love every move.
Buy it. Sell it.Love it.
®Contact
Advertise with us
Local marketplaces
International marketplaces
Scan to download the carsales app
Want more info? Here’s our app landing page
App Store and the Apple logo are trademarks of Apple Inc. Google Play and the Google Play logo
are trademarks of Google LLC.