This month’s Insight provides an overview of policy changes to the New Car Plan affecting the level of funding available to automotive industry participants. We also analyse trends in new vehicles sales during September 2011.
New Car Plan – an overview
Insight:
Despite the introduction of the New Car Plan, manufacturers supplying the automotive industry require greater certainty about funding from state and federal governments. Many suppliers rely on these funds to provide the necessary cash flow for research and development activities. Clarity around the level of funding available to industry participants is required to ensure the longevity of the industry in Australia.
Background
On 10 November 2008, the federal government announced the New Car Plan for a Greener Future, designed to make Australia’s automotive industry greener and more internationally competitive.The government increased the total level of assistance to the industry from the $3b already committed, to $6.2b over 13 years.
The New Car Plan was revised to $5.4b in January 2011 when $800 million of the Green Car Innovation Fund (GCIF) was reallocated for flood relief.
Overview of the New Car Plan
Source: Department of Innovation, Industry, Science and Research
1 Scheme includes funding of $1.5b 2011-2015 (capped), $1b 2016-2020 (capped) and $847m uncapped.
2 Although these programs were not yet due to close all funding for these programs had already been allocated by the end of FY 2011.
Key highlights of the revised New Car Plan and Policy changes
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ATS – The ATS replaces ACIS Stage 3 and provides key assistance across Australia’s automotive industry. It provides grants for research and development and investment in new plant and equipment. Funding is split between Australian vehicle manufacturers (55%) and the supply chain (45%).
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GCIF – The government closed the GCIF scheme 10 years earlier than anticipated, cutting the original target by more than $800m to help finance flood relief. The GCIF was set up to support development programs for Australian-built cars and automotive components, on a one to three dollars basis.
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All contractual commitments and grant offers made by the government through the GCIF have been honoured, and applications received by 27 January 2011 have been processed. At 6 September 2011, 15 companies have received approval for GCIF grants with a combined value of almost $415m (GST excl). The three major Australian car makers represent nearly 80% of these grants as outlined below:
- Holden was awarded $149m towards local production of the four-cylinder Cruze (completed in February 2011) and $39.8m towards initiatives to improve Commodore fuel efficiency.
- Ford was awarded $42m towards the cost of engineering its new-generation EcoBoost four-cylinder Falcon engine.
- Toyota was awarded $98m towards production of the Camry and Hybrid Camry including retooling its Altona engine plant for a new four-cylinder engine.
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Recent government cuts relating to the Cleaner Car Rebate Scheme ($430m) and LPG Conversion Rebate Scheme ($96m) which related to converting existing vehicles, were not part of the original or revised New Car Plan.
To date, there is no clear indication of whether the government will re-open the Green Car Fund in the future, or if any specific funding projects, in addition to the ATS program, will be introduced to assist Australia’s automotive industry moving forward.
New vehicle sales – key trend analysis
Insight:
In September, new vehicle sales grew for the second consecutive month, as the automotive industry readies itself for a final quarter push towards another year of one million plus sales.
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In September, the strong sales seen during August continued, with an increase in new vehicles sales of 2.1 % over September 2010. This second consecutive monthly increase brings year to date sales to just 3.7% behind 2010 volumes (from 4.4% behind during August). The Federal Chamber of Automotive Industries, Chief Executive Ian Chalmers, declared that “industry resolve is high” to record over a million annual sales for the fourth time.
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The Toyota Corolla was a new arrival to the top of the most popular vehicles list during September, with 3,766 sales – just edging out the Commodore with 3,712 sales. After the successful launch of the updated Ford Territory during June 2010, it has now fallen back out of the top 10 selling vehicles in September, leaving the Falcon as the only Ford model to make the top 10.
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In addition to the Corolla, Toyota recorded strong results across the majority of their product range and recorded the first monthly increase of sales over 2010 volumes since January 2011. This is a sign the manufacturer is working hard on making up for supply constraints faced earlier in 2011.
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After recording the highest vehicle sales in August, the remaining Mazda 3 stock was cleared during September, as Mazda prepares for a facelift of the model in October. Sales of the Mazda 3 dropped from 5% to 3% of vehicle sales in September, making it only the fifth most popular vehicle. This allowed the Commodore to retake the lead in year to date sales, with 31,977 vehicles sold – narrowly ahead of the Mazda 3 (31,439).
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Sales of rental vehicles increased 36.1% in September 2011 over September 2010. This result was primarily driven by 1,183 additional rental passenger vehicle sales. Year to date rental sales are now 1.7% ahead of 2010.
Top ten vehicle sales
September 2011
Year to date
Stop Press
Lack of parts availability due to Thailand floods has forced nine Japanese manufactures (including market leader Toyota) to suspend production in Thailand. We await the effects on sales in the final quarter of 2011.
Contacts
Melbourne
Stephen Longley
t: +61 3 9269 4136
e: slongley@ppbadvisory.com
Ben Verney
t: +61 3 9269 4118
e: bverney@ppbadvisory.com
Robert Ditrich
t: +61 3 9269 4223
e: rditrich@ppbadvisory.com
Sydney
Greg Quinn
t: +61 2 8116 3278
e: gquinn@ppbadvisory.com
Brisbane
Grant Sparks
t: +61 7 3222 6807
e: gsparks@ppbadvisory.com
David Leigh
t: +61 7 3222 6822
e: dleigh@ppbadvisory.com
Perth
Simon Theobald
t: +61 8 9216 7601
e: stheobald@ppbadvisory.com
Adelaide
Peter Macks
t: +61 8 8211 7800
e: pmacks@ppbsa.com.au
Auckland
David Webb
t: +64 9 3041 301
e: dwebb@ppbadvisory.com
Important: This information is not advice. Readers should not act solely on the basis of information contained in this document. We recommend that formal or independent advice be sought before acting in the areas covered herein.
Automotive statistics - Australian new vehicle sales
Sales by state
September 2011
Year to date 2011
Sales by manufacturer
September 2011
Year to date 2011
Sales of locally manufactured vehicles
September 2011
Year to date 2011
Sales by passenger/SUV classification
September 2011
Year to date 2011
Sales by buyer type
September 2011
Year to date 2011
Sales by country of manufacture
September 2011
Year to date 2011
Sales by fuel type*
September 2011
Year to date 2011
Top ten vehicle sales
September 2011
Year to date 2011
Sales growth by state
September 2011 growth (compared with September 2010)
Year to date 2011 (compared with year to date 2010)
Sales growth by manufacturer
September 2011 growth (compared with September 2010)
Year to date 2011 (compared with year to date 2010)
Sales growth of locally manufactured vehicles
September 2011 growth (compared with September 2010)
Year to date 2011 (compared with year to date 2010)
Sales growth by passenger/SUV classification
September 2011 growth (compared with September 2010)
Year to date 2011 (compared with year to date 2010)
Sales growth by buyer type
September 2011 growth (compared with September 2010)
Year to date 2011 (compared with year to date 2010)
Sales growth by country of manufacture
September 2011 growth (compared with September 2010)
Year to date 2011 (compared with year to date 2010)
Sales growth by fuel type*
September 2011 growth (compared with September 2010)^
Year to date 2011 (compared with year to date 2010)^
* Excludes 'Heavy Commercial' vehicles
^ The analysis excludes the electric fuel type given that electric sales represent less than 0.05% of all vehicle sales. September 2011 electric sales were 8 down from 37 recorded during 2010, while year to date electric sales are 35 down from 41 last year.
Movements in actual data and growth rates less than 5% are not annotated in the above charts.
Source: Federal Chambers of Automotive Industries - VFACTS National Report
