The Federal Chamber of Automotive Industries (FCAI) says sales of new vehicles will plummet at least 10 per cent if the federal government continues with its planned fringe benefits tax (FBT) changes.

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FCAI CEO Tony Weber said its analysis of the proposal revealed the changes threatened to wipe more than 100,000 new-vehicle sales off the market, and would also have a dire effect on Australian car makers Holden, Toyota and Ford.

“This is terrible news for car makers – importers and local manufacturers – who rely on volume to be viable in this country,” Weber said

“Even more concerning is that when we look at our local manufacturers alone, we expect the drop in their sales to be significantly higher – averaging almost 20 per cent.

“It has already been a very difficult time for local manufacturing in this country. I fear the Government’s decision to change the FBT policy for vehicles could have a dire effect on Australian car production, including the manufacturing supply chain.”

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Sales of locally manufactured vehicles fell almost 25 per cent in the first half of this year, before the FBT changes were announced. Sales of Australian-made Holden vehicles plummeted 34 per cent to 24,607, while sales of locally manufactured Fords and Toyotas both dipped 14 per cent to 15,069 and 12,926 respectively.

The FCAI – the peak industry association representing the manufacturers and importers of passenger and light-commercial vehicles and motorcycles in Australia – is once again calling on the government to reconsider its decision to eliminate the statutory formula method for salary-sacrificed and employer-provided cars.

The federal government maintains it has no intention to change its policy, which was introduced without notice earlier this month.