THE GST is having a profound effect on new car sales.
Yet unlike consumers, businesses are not waiting for the GST and the expected fall in prices before purchasing says Westpac economist Justin McCarthy.
Commercial vehicle registrations rose by 3.8 per cent in October to be up 4.1 per cent for the year ended October.
He said the strength of domestic activity had compelled firms to continue purchasing vehicles to meet the greater demand for their goods and services.
“Furthermore, with commercial vehicles written off as an expense, including allowances for depreciation, there is less incentive for businesses to postpone their vehicle purchases.”
Even so, commercial vehicles only account for one in five new vehicles sold. Total sales are being hit hard by expectations of significant price falls following the introduction of the GST on 1 July 2000.
New motor vehicle registrations, in seasonally adjusted terms, fell 0.3 per cent in October to be down 7.6 per cent compared with October 1998, the latest Australian Bureau of Statistics figures reveal.
This is the fourth consecutive monthly fall with registrations down more than 11 per cent so far this financial year.
The chance of a government backdown, despite strong pressure to cut wholesale sales tax, is looking increasingly unlikely.
Mr McCarthy said car sales were the weak link in the consumption expenditure story.
“While retail sales volumes rose by 2.6 per cent in the September quarter, new car sales were down by around 7 per cent,” he said.
“We expect vehicle sales to detract around 0.3 percentage points from third quarter consumption expenditure, given that car purchases account for around 4.5 per cent of total consumer spending.”
