Luxury car tax costing jobs, says Aussie remanufacturer
Walkinshaw chief claims LCT is hurting the industry it was designed to protectLuxury car tax is costing Australian jobs, rendering new projects economically unviable, according to Walkinshaw Group CEO Ryan Walkinshaw.
Having produced the final outgoing-generation Volkswagen Amarok W-Series tough-truck last week, the Melbourne-based right-hand drive automotive conversion and performance business also ‘remanufactures’ RAM, Chevrolet Silverado and now Toyota Tundra pick-up trucks, but says potential new project are off-limits due to the LCT.
Walkinshaw recently appeared on Sky News Australia calling for greater consultation with federal government about the role of LCT, saying it is now hurting the industry it was designed to protect.
Speaking with carsales, Walkinshaw expanded on his comments.
“We are approached on a monthly basis by OEs [car-makers] wanting to discuss bits and pieces. Nine times out of 10 they’re just exploring options and nothing eventuates but more and more we’re seeing potential OE partners wanting do things like SUVs.
“We know we can do great work on SUVs because a lot of what we’re doing in utes we can transfer across on what we think will be appealing to a customer.
“And what’s frustrating is that when it comes to doing the business cases, they always fall over because where you’re fighting in a much more competitive group across the entire range of brands here in Australia, it becomes much harder to be able to add value to the product in a significant way.
“When you do succeed in doing that, and that’s an if, then when you end up adding the compound of luxury car tax for every single dollar you put onto the product, it normally kills the program. Now, these programs, as we’ve seen with the [Amarok W580] program with VW, you can get 50 to 100 new employees.
“We’re now hiring 1500 people across Walkinshaw Group, if luxury car tax was removed, I’d be quite confident that we’d have four or five new programs, particularly in the SUV space, and I know that because we’ve got partners that are talking to us about it.
“If you compound that with another 600-700 jobs that would be associated with it, that’s a huge amount of growth from an employment perspective.”
The Walkinshaw Group has seen significant growth since its days as HSV. It’s on track to produce 12,000 vehicles in 2022 across the Volkswagen Amarok W580, Chevrolet Silverado and RAM programs, but Walkinshaw himself says there is still plenty of room for growth.
“From a volume perspective we could get close to 15 to 20,000 if luxury car tax was removed with new programs.
“Also, the benefit of having a business that’s growing and profitable and the taxes achieved not only by Walkinshaw Group, more taxes based on our financials, but then all of our suppliers. It’s a great growth story not just for us but for our competitors, for the automotive brands and for the suppliers.”
A challenge in official discussions has been the lack of understanding about how luxury car tax is applied, said Walkinshaw.
“We’ve had discussions with government officials who say ‘we don’t want to remove the vehicles you’re already doing from luxury car tax by giving you an exemption’, but we’re not doing any vehicles that are currently falling into the luxury car tax category. All we will be doing is having incremental volume.
“So we’re not asking for any benefits or cutbacks or any donations. We’re literally just asking for an exemption for products that are built in Australia – that have potentially a percentage of locally-sourced parts, that employ a certain number of Australians and add an additional amount of value to a core product – that those products can be exempt because you’re increasing Australian manufacturing capability.
“Ultimately, it [LCT] was never meant to hamper Australian automotive manufacturing, it was supposed to do quite the opposite. It was meant to penalise international brands and protect the likes of Holden, Toyota, Ford.
“However, unfortunately, the way they thought about this tax was price point focused and it should have been focused on other things, in my opinion, such as percentage of content sourced locally.
“All we ask is that maybe we re-evaluate it, or at least try and discuss an exemption so that we can try and grow the industry that the tax was supposed to be saving, as opposed to what it’s currently doing to us, which is massively hampering our potential growth.”
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