Vehicle market shows signs of recovery

No longer on life support, but still not out of the woods, Australia's car market posted its third best monthly sales on record in June.

After being lashed by the global economic downturn, which turned a blowtorch on both domestic and export demand, the federal government linked last month's improvement to its targeted investment incentives.

While local car producer GM Holden said the strength of retail demand took most companies by surprise.

The Federal Chamber of Automotive Industries (FCAI) said 102,847 vehicles were retailed in June.

The result was down 3.5 per cent compared to the record performance in the same month in 2008 but was the best month for the industry over the past financial year.

June took demand over the first half of 2009 to 455,223, down 16.1 per cent on the same period last year.

Federal Industry Minister Kim Carr said the Australian car market was performing better than those in the United States, Europe and Japan.

"This strong outcome means Australian vehicle sales performance has exceeded sales in most other major economies," Senator Carr said on Friday.

"In June 2009, US sales fell by 27.7 per cent and Japan by 14.5 per cent.

"We've outperformed Europe, where the latest figures show a 4.9 per cent drop, despite the fact that many European economies have adopted expensive scrappage programs aimed at stimulating vehicle sales."

GM Holden's executive director of sales, marketing and after sales, Alan Batey, said the vehicle market was showing encouraging signs of recovery.

But he said it was difficult to predict the market for the full year, although customer orders were up and stock levels would also improve in July.

"I don't expect because of what we've seen in June that we're going to have an accelerated recovery," he said.

"There is a slow recovery in place, which will continue.

"But I don't have enough data at the moment to be game enough to try to predict where the market might be."

Toyota was the top-selling company in June with 21,410 vehicles, ahead of Holden on 12,167 and Ford on 10,194.

Toyota was also the market leader over the first six months of 2009 with 94,233 vehicles compared to 56,152 for Holden and 46,456 for Ford.

Senator Carr said most encouraging in the June result was the 12 per cent jump in business sales compared to the same month last year.

"It is proof positive that the government's carefully targeted investment incentives are working extremely well," he said.

Mr Batey said those incentives clearly had traction in stimulating sales at a time when many customers still had concerns about domestic and global economic conditions.

While Toyota's executive director of sales and marketing, David Buttner, also welcomed the government incentives, together with the rise in business and consumer confidence.

"The general improvement gives us confidence as we head into the second half of the year," Mr Buttner said.

FCAI chief executive Andrew McKellar said the government's business tax break had led to an additional 10,000 sales 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," Mr McKellar said.

"This is additional turnover of between $300-$400 million that is providing a direct boost to the car industry as well as other local businesses throughout the Australian economy.

"The tax break is classic stimulus, it is giving business the confidence to invest in their own future and securing jobs in the industry."

In the June figures, Holden had the top-selling car - retailing 4,748 Commodores.

Other top-selling cars included the Toyota Corolla (4,060), Mazda3 (3,741), Hyundai i30 (2,742), Toyota HiLux 4x4 (2,658), Nissan Navarra 4x4 (2,266), Hyundai Getz (2,263), Toyota Yaris (2,194), Toyota HiLux 4x2 (2,098) and the Mitsubishi Lancer (1,904).