FBT fears recede

July proved to be a stronger month for sales than the industry anticipated, according to Phil Horton, BMW Australia's Managing Director.

After the panic following the government's announcement it would change the basis for calculating FBT for new-car sales, the country apparently settled down again and went back to its business of buying cars. But the overall gain in July was a result of deliveries for orders already placed prior to the FBT announcement.

The government's determination to close a tax loophole did have some impact on new-car orders, said Horton, at the launch of the upgraded Z4 sports car last week, however the BMW boss believes the FBT will ultimately have little impact on the overall sales for the 2013 calendar year.

"It has had an impact – or rather the election has had an impact," Horton said. "The FBT element of that has had an impact. I think we were all surprised that July was quite as strong as it was... the July market, year on year, was up seven per cent.

"But I think everyone had the same phenomenon that we had – which was we had a very strong June; we took a lot of orders in June, and that really saw us through July. But July was not particularly strong on order-take..."

Horton, who spoke of "a general lack of confidence, both consumer confidence and business confidence," believes alarm in the community about proposed changes to the FBT would undoubtedly affect purchasing decisions "whether you're buying a Fiat [500] Pop or buying a top-of-the-range 7 Series," but he, along with the rest of BMW Australia, feels that purchasers are not altogether deterred by the government announcement; they're just holding off until the election or later. That means we're likely to see a very strong fourth quarter for sales.

"I think we all hope that they're delaying the purchase – and I think personally... that's what's happening," Horton said. "We're setting ourselves up for a strong-ish bounce once the election result is known. And this isn't a political statement, because obviously BMW doesn't make political statements, but I do feel our position... is that the coalition will get in... probably with more than a working majority. That will give some confidence and clarity to the market."

Does feedback from dealers indicate there's also a broader market-wide perception that Coalition will win?

"I couldn't really talk about that..." Horton replied. "I obviously talk to some of my colleagues in the Federal Chamber [of Automotive Industries] – and I think that seems to be the current thinking...

"That's certainly what's driving us now.

"So we do think that – to answer your question in a different way – that the market will end up the year, despite a sort of hiatus... this pause running up to the election... at about three per cent up.

"So that will carry on; we don't see it as this massive bounce back, but I think there will be clarity around FBT if the coalition comes in. Personally I still think the coalition would probably take the opportunity at some stage, to do something with FBT, but clearly – having seen what the reaction was to the government's position – I don't think they'll be as kack-handed about it. [They'll be] probably a bit more subtle about it, and at a lower level as well.

"I don't think the FBT thing is off the table, but I do think it will effectively reduce its significance quite dramatically."

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