"Australia Autos Report Q3 2011" is now available at Fast Market Research

New Transportation research report from Business Monitor International is now available from Fast Market Research
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June 29, 2011 - PRLog -- New vehicle sales in Australia stood at 1,035,574 units in 2010, an increase of 10.5% year on year (y-oy), according to data released by Australia's Federal Chamber of Automotive Industries (FCAI) in January 2011. A total of 592,122 new passenger cars were sold last year, alongside 235,285 SUVs and 208,167 commercial vehicles. The final sales total was just shy of BMI's own forecast for 2010, but it still represents a strong level of sales growth and marks only the third time that the Australian new car market has exceeded the 1mn unit mark, according to the FCAI.

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Toyota Motor was the best selling brand in Australia (for the eighth year in a row) last year, with a market share of 20.7%. In second place was Holden with 12.8% of the market and in third place was Ford Motor, which claimed 9.2% of sales. The country's top-selling model remained the Holden Commodore (for the 15th year in a row) with 45,956 units sold, ahead of the Toyota Corolla (41,632) and Toyota Hilux (39,896).

The FCAI says it expects 2011 to be 'a year of consolidation for the industry', a view BMI shares. Interest rates are now in an upward trend, following the surprise rise (to 4.75%) by the Reserve Bank of Australia in November 2010, which could deter car buyers dependent on financing. The devastating floods in Queensland in Q111 will also affect new car sales over the short term as new car purchases fall down the list of priorities of those people affected by the event.

Looking at the most recent data (for the first four months of 2011), new vehicle sales were down by 10.5% year to date, at 322,678 units. This reflects not only the impact of the Queensland flood, but also a sharp 8.8% annual fall witnessed during April, with both Easter and the Anzac Day holiday falling in this month in 2011.

However, there are reasons for some measured optimism over the evolution of new car sales over the remainder of the year. First, the Australian economy is poised for solid GDP growth this year (recently estimated at 4.25% by the Reserve Bank of Australia), with this growth set to be bolstered by flood reconstruction efforts. Second, the Australian dollar remains strong, meaning that the real-terms cost of buying an imported car will be slightly lower. Moreover, later in the year, Queensland residents will start to look for vehicles to replace those lost to the floodwaters. Against this backdrop, we maintain our forecast of sales growth of 5.4% in 2011 for now, but will closely watch sales data over the remaining two months of the first half of the year to see if any adjustments become necessary. Looking further ahead, we believe that sales growth can reach an annual rate of 4% in the remainder of our forecast period, with nearly 1.3mn units sold in 2015.

On the production side, output in 2010 stood at 239,443 units, an increase of 7.2% y-o-y and slightly above our full-year forecast of 237,956 units. Output has suffered significantly in the first four months of 2011, with production standing at 65,097 units, down by over 20% on the 82,100 units produced over the same period in 2010. However, with this four-month result representing an improvement on the 28% fall that had been seen over the first three months of the year, we again choose to maintain our production figures for now, until we get a clearer picture of the situation on the ground.

Recent output levels have been impacted by both flooding and the lack of availability of parts from Japan, so we would like to see a full six months of data before making any changes to our forecasts. That said, we would state that there are now clear downside risks to our 2011 production forecast, given the poor start to the year, and with the Australian government now having to cut back on support to the auto industry in order to reassign funding to flood reconstruction efforts (see below).

Auto Industry Decries Axing Of Government Support

Following the floods in Queensland in January 2011, the Australian government has had to make a range of spending cuts, with the money saved to be redirected towards flood reconstruction efforts. The government has decided to make a significant cut in the amount of money it spends on the auto industry, announcing an immediate end to the car scrappage scheme and Green Car Innovation Fund (GCIF). The GCIF's budget had originally been set at AUD1.3bn for a 10-year period when established in 2008, although its budget had already been cut by AUD400mn in 2010.

In response to this decision, Ford, Toyota Motor and Holden have written to Australian Prime Minister Julia Gillard, asking her to explain why she has axed the GCIF programme less than three years into its life, claiming that this breaches agreements made when the fund was established in 2008. FCAI CEO Andrew McKellar says the move 'a bitterly disappointing decision and one which is to be regretted', warning that the decision 'sends an adverse signal to international investors responsible for future investment in the Australian industry'.

In response, Gillard has vowed to spare car companies from any future cuts in subsidies, saying that the government 'understands the need for certainty and the long lead times for investment in the highly competitive automotive industry'. The government has also pledged to maintain financial support for the country's electric mid-size sedan project. Minister for Innovation, Industry, Science and Research Minister Kim Carr also says that there is still AUD130mn in grant money remaining within his budget to contribute towards eco initiatives.

Clearly, in a difficult time for the Australian people, savings have had to be made to aid flood relief. However, the decision to axe these schemes, while necessary in the short term, may be to the detriment of the Australian auto industry over the longer term. About Business Monitor International

Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets.  BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports.  Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports.  View more research from Business Monitor International at http://www.fastmr.com/catalog/publishers.aspx?pubid=1010

About Fast Market Research

Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.

For more information about these or related research reports, please visit our website at http://www.fastmr.com or call us at 1.800.844.8156.

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Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.
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Tags:Car, Australian, Fcai, Toyota, Auto, Minister, Gcif, Motor, Says, Money
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