Federal stimulus prompts car sale surge

Last month was the third highest month on record for vehicles sales as business buyers got in to claim investment tax breaks.

VFACTS data released by the Federal Chamber of Automotive Industries (FCAI) showed sales of 102,847 vehicles in June.

The sales figures, which include cars, SUVs and commercial vehicles were third only to the previous two Junes: 106,541 vehicles were sold in June last year, and 105,097 in June 2007.

The FCAI's chief executive, Andrew McKellar, says it is a positive sign for the industry and the economy.

"This is the third highest selling month on-record and only the fourth time ever that sales have exceeded 100,000 units in a single month," he said.Artificial boost

However, there was a massive sales boost among businesses, which bought 46,679 vehicles in June, a 12 per cent increase on a year ago, with vans, utes and light truck sales up 26.9 per cent on June last year.

The FCAI says Federal Government tax incentives are responsible for the surge.

"The surge in business sales is directly attributed to the Federal Government's business tax break and these figures provide clear evidence that this has been a very effective policy measure," Mr McKellar said.

"Our analysis indicates that the business tax break has led to an additional 10,000 vehicles being sold over the past three months. That is a 10 to 12 per cent boost to business sales and a five per cent increase for the total market."

However, the surge raises questions about how big the slump will be when the Government's small business investment tax breaks finish at the end of this year, and now that the big business tax concessions have ended.

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Fri 3rd July 2009 - 12:11pm