NO.003

AUTOMOTIVE SALES BREAK ALL TIME RECORD

Today’s automotive sales figures show that Australians bought more new

motor vehicles in 2003 than ever before. The total of 909811 cars, trucks and

buses easily surpasses the previous record, set in 2002. This is the first time

total sales have exceeded the 900000 mark in a calendar year.

The outcome is a credit to the Australian car industry which has worked hard

to offer better quality cars to consumers.

The record sales results of recent years also reflect the impact of lower taxes

through the abolition of the 22percent wholesale sales tax.

This means that cars are now subject only to a 10 per cent GST for consumers,

and there is effectively no tax at all for business and fleet consumers.

Replacing the 22percent WST with the GST was estimated by the Australian

Competition and Consumer Commission to reduce car prices by around 6 to 8percent

– a saving of around $2 500 on a family size car worth $32000. The reduction

in price for motor vehicles purchased by businesses is even greater at 16percent

as an input tax credit effectively means that no GST is payable.

Tariff reductions from 25percent in 1996 to the current rate of 15percent

have also reduced car prices for consumers. On a car with an import value of

$20000 the effective reduction in price since 1996 is around $2000.

The reduced taxes and tariffs have contributed to a decline in the cost of

motor vehicles of around 14percent since June 1996 as measured in the consumer

price index.

The Federal Chamber of Automotive Industries is predicting that sales will

again top the 900000 mark in 2004.

Furthermore, automotive exports are approaching $5 billion a year – almost

triple their level in 1995 and more than a tenfold increase since 1985, when

tariff rates were at their peak. As a result, the industry is now Australia’s

sixth largest exporter.

The record number of new cars is good news for road safety with new models

having considerably better safety features than early model cars, while the

improved fuel efficiency and emissions standards of new models will deliver

better environmental outcomes than earlier models.

Although the recent appreciation of the exchange rate is putting pressure on

exports, with an improving world economy, continued innovation by the automotive

industry and ongoing sound economic management and reform by the Government,

the future of the industry is still strong.

MELBOURNE

21 January 2004

Contact: David Alexander 0418 210 601