SA: Motor vehicle sales slide likely after rosy year

AAP General News (Australia)
12-20-1998
SA: Motor vehicle sales slide likely after rosy year

By Tim Dornin, National Motoring Correspondent

ADELAIDE, AAP - The Australian vehicle industry is bracing itself for a substantial plunge
in new car sales in 1999.

With continuing uncertainty over the introduction of the GST and the growing impact of the
Asian economic crisis, the total market has been tipped to fall by up to 60,000 units, or 7.5
per cent.

That would be a far cry from the industry's record performance in 1998 when aggressive
marketing, discount pricing and the introduction of new models stimulated both the fleet and
private sectors.

To the end of November this year sales had reached 736,107 units, a healthy 12.2 per cent
rise compared to the 655,868 sold at the same time in 1998.

Over the full 12 months demand was expected to top 800,000 units, a record for the second
year in a row, after just over 722,000 vehicles were retailed last year.

The race for market leadership remained a tense struggle between Toyota and Holden, with
Toyota leading by just over 1,500 units with just one month to go.

Sources suggested that gap had closed to about 600 units by mid-December, making the result
almost two close to call going into the final two weeks.

One result was clear, however, with the Holden Commodore easily winning the battle over its
traditional rival, the Ford Falcon, for the title of the top selling car.

Demand for the Commodore remained strong throughout 1998 even after the September launch of
the new AU Falcon.

Commodore sales were likely to top 90,000 units compared to about 70,000 for the Falcon
with the Hyundai Excel the next best on about 44,000.

As well as challenging for market leadership and having the top selling model, Holden also
saw production soar to record levels at its South Australian manufacturing facility.

The company said it expected to produce about 120,000 vehicles, the outcome bolstered by
the mid-year start of local production of the mid-sized Vectra alongside the Commodore, with
the new car destined for both domestic and export markets.

The milestones came in what was also Holden's 50th anniversary year, celebrating the launch
of the first Australian-made production car in 1948.

Holden staged a series of events to mark the occasion, with the culmination being the
re-enactment of the original launch on November 29 with the help of Prime Minister John
Howard.

Reflecting on that event and the year, Holden managing director Jim Wiemels said the
anniversary had clearly been an exceptional time for the company.

"Holden's achievements of record production volume, extraordinary success in new export
markets and a successfully expanding product range showed Holden's determination to take its
industry leadership heritage into the next century," Mr Wiemels said.

The only disappointment from Holden's was its reluctance to give an immediate go-ahead for
production of the Commodore Coupe after a concept model stunned the industry and the public at
the Sydney Motor Show in October.

Holden said it was still developing a business case for a production version, although
industry analysts suggested the car would almost certainly become part of the Commodore range,
probably in the year 2000.

By contrast things were not so hot over at Ford where the immediate impact of the new
Falcon was probably not as good as the company had wished for.

Ford president David Morgan said last week that despite reports to the contrary the new car
was meeting its sales targets.

But he admitted 1998 had been an expensive year for the company and profits would be down
significantly.

Hyundai also suffered a blow late in the year with a safety scare surrounding about 46,000
of its Excel passenger cars.

The Australian Automobile Association first raised concerns, and Hyundai admitted a problem
with underbody welds which might affect the steering on the cars.

After talks with Federal Office of Road Safety Hyundai later agreed to strengthen all the
cars in question with stainless steel rivets, the field service campaign expected to cost the
company about $5 million.

Toyota also presented some gloomy news to the industry this year when it announced the end
of local production of the Corolla small car in 1999, effectively ending all small car
production in Australia.

However, the company said it planned to begin building a large six cylinder model in
Melbourne alongside the Camry from the turn of the century.

But looming over all the sales records, the celebrations and new releases this year was the
federal government's plan to introduce a 10 per cent GST on new car sales from July 1, 2000,
replacing the current 22 per cent wholesale sales tax.

On the face of it the change was good news for the car industry and car buyers with prices
likely to fall by more than $2,000 on the average family car.

The problem for the industry was the likely slowdown in sales leading up to the change as
customers delayed purchase decisions to wait for the big savings.

Going into the Christmas break the industry said it was still negotiating a satisfactory
introduction of the GST with the government.

Without it both local producers and importers feared something of a buyers' strike to
emerge towards the end of 1999, with the real prospect of demand grinding to a halt early in
the year 2000.

AAP tjd/kr/br

KEYWORD: YEARENDER MOTOR

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