Looks like the Federal Government needs to add a JumpStart program to its JobSeeker and JobKeeper initiatives.
That’s because cars sales are plummeting, down almost 50 per cent this month and 20 per cent year on year, thanks mainly to the COVID-19 crisis.
The Federal Chamber of Automotive Industries (FCAI) has lashed out, saying the Government needs to help low margin, high turnover businesses like new car dealers which have been hit hard by the crisis.
FCAI chief executive Tony Weber called on both State and Federal Governments to consider the automotive industry, which employs more than 65,000 people in Australia — when they compile recovery plans.
“The JobKeeper and JobSeeker payment programs put in place by the Federal Government are a welcome initiative,” Mr Weber said.
“However, we believe the scope needs to ensure high turnover and low margin businesses, such as new car dealerships, are covered.
“These businesses are often the backbone of local communities and, in the current environment, many are facing overwhelming challenges.
As well as continued business initiatives, Mr Weber said support to bolster consumer confidence is imperative to the strength of the economy.
“We have begun to see a slight lift in consumer confidence as the COVID-19 restrictions start to ease,” he said.
“We really need further measures to support this confidence and continue the positive trend.
“Initially, we would ask that the instant asset write off package is extended to further stimulate business purchasing.”
The new car industry was already in trouble before the outbreak of the Coronavirus, with sales figures for April showing the 25th consecutive month of declining sales.
FCAI says environmental, economic and political factors, along with tight credit lending restrictions — have all contributed to this fall.
The latest figures show new car sales fell 48.5 per cent in the month of April, compared to the same period last year.
A total of 38,926 sales were recorded for the month, compared to 75,550 sales in 2019 — the largest single decrease since figures were first recorded in 1991.
Year to date figures totalled 272,287 sales, down from 344,088 in 2019 — which equates to a 20.9 per cent decline.
“Clearly, the COVID-19 pandemic has had a major influence on the April sales result, and reflects a downturn in the broader economy right across the country,” Mr Weber said.
“Figures recently released by the Australian Bureau of Statistics show that 31 per cent of Australian citizens have experienced a decrease in income due to the pandemic,” Mr Weber said.
“In addition 72 per cent of Australian businesses reported that reduced cash flow is expected to have an adverse impact on business over the next two months.
“These conditions inevitably impact consumer confidence and purchase decisions.”
Mr Weber says the automotive industry in Australia has focused on keeping dealerships open to ensure customers can access sales and important maintenance services for vehicles, despite the current health and economic difficulties.
“Our member brands are working closely with their dealer networks to ensure dealerships are accessible and safe,” he said.
“Enhanced hygiene protocols and contact-less sales and social interactions have been initiated to ensure personal protection for both customers and dealer staff.
Many automotive brands are also providing financial and sales target relief to stressed retail outlets.
“We know that our member brands are doing everything they can to assist both their dealerships and their valued customers during this difficult time.”