New car dealers in Victoria have started to count the cost of the recent changes to the Fringe Benefits Tax (FBT). VACC and its Australian Automobile Dealers Association (AADA-Vic) members were quick to criticise the Federal Government’s announcement to cut to fringe benefits concessions for car owners on Tuesday, claiming it would affect new car sales and create unwelcome red tape for small business owners and employees. Just a few days on and new car dealers are already reporting a suspension of settlements and cancellation of deliveries to customers.
VACC, the peak automotive industry body in Victoria, represents 5,300 members, including new car dealers. Together with the Australian Automobile Dealers Association (AADA-Vic), VACC is concerned the Federal Government’s recent change to Fringe Benefits Tax (FBT) will hit new car dealers the hardest.
The Australian automotive industry has been united in its criticism of the Federal Government’s lack of consultation and lack of detail regarding FBT. VACC members and new car dealers in particular have been left grappling for information and trying to second guess the changes they’ll have to make.
“Rightly, the Federal Government has been widely censured by the whole automotive industry for this ill-conceived and counter-productive change to the FBT. However, we need to emphasise the specific plight of the new car dealers,” VACC Executive Director, David Purchase, said.
“New car dealers will suffer the most from the Federal Government’s new policy. They are telling us that, already, orders have been cancelled, settlements suspended and deliveries to customers postponed.
“We know of one member, with multiple dealership franchises in Victoria which normally sells between 120-150 cars a month as leased or company cars. Customers have put a stop on these sales until further notice, resulting in some employees being surplus to requirements. While sales have stopped, stock keeps arriving from orders placed months in advance. The dealership will soon become overstocked with cancelled back orders and the arrival, and storage, of new vehicles. If swift action is not taken, this could be as big an issue as the floor plan credit crisis in 2008.
“We call on the Federal Government to reverse its decision. If changes to FBT are desired, there should be consultation with all sectors of the automotive industry, and new car dealers, in particular. The retail, service and repair sector of the automotive industry is significant and should not be ignored,” Mr Purchase said.