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 in interest rates (to 4.75%) by the Reserve Bank of Australia in November 2010, which could deter car buyers dependent on financing. The devastating floods in Quee buick nsland 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.
For now, we maintain our forecast of sales growth of 5.4% in 2011, but will closely watch sales data over the first half of the year to see if any adjustments will 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. We audi expect production growth between 4% and 7% per car news annum over the remainder of our forecast period to 2015, although we caution that recent government spending cuts to auto sector subsidies may impact the near-term outlook.
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 her 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.
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