BMW and Mercedes-Benz have briefed their head offices about Kevin Rudd’s proposed change to the Fringe Benefit Tax, and say it’s already affecting their sales.
Federal Treasurer Chris Bowen said today the changes would not hurt the Australian automotive industry, as many car-makers and the Federal Opposition have claimed.
However BMW and Mercedes-Benz said they were already seeing the affects of the decision on their front lines.
Both have also said, despite claims by the Labor Party that a lot of people are buying luxury cars and claiming personal mileage as a work-related expense, that most people who benefit from the FBT car rebates are just average, mid-level earners. This was echoed by shadow treasurer Joe Hockey today.
The majority of these people earn less than $100,000 a year. “If that’s the big end of town then I guess I’m at the big end of town,” said Mercedes-Benz Australia Pacific spokesperson David McCarthy.
McCarthy told Business Insider that while orders were not being cancelled, a lot of customers were telling dealerships they are going to hold off on their purchases until after the election as, unless parliament is recalled, that’s the earliest Rudd will be able to legislate for the change.
Without knowing the election date, customers are asking “How can I make a decision on this?”
“For us it’s a small number of cars and not a big issue at the moment. My understanding is that it is a big problem for brands doing significantly more volume.”
For any car dealership or importer though, the proposed changes “are like someone turned off the tap” on at least some of their orders being followed-through on by customers, McCarthy said.
BMW Group Australia spokeswoman Lenore Fletcher said while she could not provide a number on orders put on hold, “there have been quite a few inquiries” from individual customers, as well as fleet sales companies that buy the cars in bulk, about the FBT change put forward by Rudd and Bowen this week.
She also lamented the government’s lack of discussion with industry stakeholders. “We were not consulted at all, as far as I am aware.”
“We have had to brief our head office … It’s really just a matter of keeping everyone informed.”
Earlier this week the Federal Chamber of Automotive industries said the government should think again about its proposed changes.
“The FCAI is yet to do precise calculations but we estimate, from today, this could impact on around a third of new car sales,” said the lobby group’s chief executive Tony Weber on Tuesday.
“I fear what this means for domestic manufacturing and I am urgently seeking meetings with the Government to encourage them to reconsider this decision.”
Mercedes-Benz passenger car boss Horst von Sanden issued the following tersely-worded statement to dealerships earlier this week:
We are trying to run a business with planning windows that start at three years and more commonly are five and ten years, this forward planning is a critical component of our business.
We have the responsibility of the welfare of 1000 direct employees and many times that in our dealer network and supplier partners.
The unilateral and non consultative nature of the FBT changes demonstrates a complete lack of understanding of the automotive industry in this country.
We abhor the lack of consultation and regard for our customers and our business and we call on the Government to consult with the industry so we can implement and support any changes. It is important to remember that its actually our customers that pay the FBT.
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