MELBOURNE - A proposed change in Australia's tax structure could profoundly depress 1999 sales, auto industry executives agree.
To oversimplify, the government has proposed that a new goods and services tax, or GST, replace the current system of wholesale taxes.
According to most estimates, the new tax system will reduce new-vehicle prices by as much as 10 percent, or $3,000 on a $30,000 car.
Eventually, industry executives agree, the new tax will help increase sales.
'In the long run, the GST definitely is good news,' said Osamu Komori, president of Toyota Motor Corp. Australia Ltd. Indeed, the new tax could help push Australia's market to new records, Komori said.
Australia has 18 million people. High taxes have kept some potential buyers out of the market, and the country's dry climate has fostered one of the oldest car fleets in the world.
But, said Komori, the rule of thumb from other developed countries is that the size of the car market should equal roughly 5 percent of the population.
'That means that 900,000 is a reasonable car volume,' if the tax impediments are removed, he said.
But because the new tax structure would not take effect until Jan. 1, 2000, many potential 1999 sales will be pushed into next year as car buyers wait to reap the savings, industry executives point out.
The impact will not be felt equally across the board, said Hiroshi Takasaka, senior deputy managing director for sales and marketing at Mitsubishi Motors Australia Ltd.
'The main effect will be on fleets, because fleet owners can calculate their total ownership costs. Private buyers wouldn't take that approach,' he said.
Fleets, including executive cars, account for 60 to 70 percent of the mid- to large-sized passenger car segment, and more than 30 percent of the entire market.