news

Ute beauty! Pick-up sales surge after COVID-19 lockdowns ease

Sales of US pick-ups such as the Ram 1500 and Chevrolet Silverado 1500 – as well as our favourites the Toyota HiLux and Ford Ranger – have been bolting out the door in the first two weeks of May.


This is according to numerous dealers and industry sources.

A survey by Drive of dealers in Queensland, NSW and Victoria has found many have started to see a return to form earlier than expected, despite the coronavirus crisis.

Sales of Ram 1500 pick-ups bucked the industry trend in April, doubling in sales when the rest of the market slowed by almost 50 per cent. And the Ram brand as a whole went up by 14.1 per cent in the worst sales month in 26 years.

Demand for the Ram 1500 is so strong that the Melbourne facility that remanufactures them to right-hand-drive to factory standards has been running 24 hours, five days a week since the middle of 2019.

 

Drive

Drive has been told demand for expensive utes and US pick-ups has remained strong in the first half of May, following an initial recovery in the last two weeks of April.

Many Holden Special Vehicles dealers have sold out of their initial allocations of Chevrolet Silverado 1500 pick-ups, which only arrived in showrooms a month ago after the first batch was converted to right-hand-drive to factory standards by HSV in Melbourne. 

Many dealers are now scrambling to get more new generation Chevrolet Silverado 1500 pick-ups (pictured below) before the next shipments arrive, as production of the left-hand-drive source vehicles has been delayed by the COVID-19 lockdowns in North America.

 

Drive

As reported by Drive yesterday, showroom stock of the Ford Ranger ute – Australia’s second-biggest selling vehicle outright – is starting to look patchy and some dealers are concerned they will run out in the lead-up to the end of June.

The two Thailand factories that produce the Ford Ranger only went back online yesterday (Monday) after a six-week break.

The two Thailand factories that produce the Toyota HiLux restarted last week after a four-week break, but dealers we spoke to said that model was in good supply, even though demand has already started to pick up.

 

Drive

The consensus among the car industry over the past fortnight is that many small businesses are taking advantage of the Federal Government’s $150,000 instant asset tax write-off scheme – due to expire on June 30, the end of this financial year.

The temporary tax advantage – which enables companies and sole traders to claim the full amount of business use this financial year rather than spreading the expense over several years – varies depending on the type of vehicle and the level of work use.

“A lot of people came out of the woodwork as soon as the government started talking about easing lockdown restrictions, and they could see their businesses could get going again,” said one major multi-franchise car dealer in Queensland.

“It was like someone turned on a switch,” said a veteran car dealer in Victoria representing several popular brands. “The end of April and especially the first two weeks of May have been strong on utes, the rest of the market not so much.”

One veteran industry executive, speaking on condition of anonymity, told Drive: “The last couple of weeks have been better than good, better than expected, and better than we could have hoped for. We reckon the Federal Government’s ($150,000 instant asset write off) stimulus package has hit the spot. That’s the only thing we can put it down to.”

 

Drive

Finance companies and other lending institutions are also starting to ease some of their restrictions after reportedly knocking back more applications than they were approving in the grip of the coronavirus crisis, according to numerous dealer sources.

While the Australian Automotive Dealers Association (AADA) has previously called on the Federal Government to consider extending the $150,000 instant asset tax write-off scheme for six or 12 months – beyond the current June 30 deadline – there has been no indication if this will happen.

“We are working on the assumption that (the tax incentive) will end on June 30 and it seems most customers are working on the same assumption,” said the industry veteran.

 

Drive

In an example seen by Drive, a car which costs $60,500 including GST (or $55,000 excluding GST) could yield an income tax saving of $15,125 for a small business subject to a 27.5 per cent tax rate and $16,500 income tax saving for a big business subject to a 30 per cent tax rate – plus the input tax credit of $5500 on the vehicle.

In another example, an eligible vehicle which costs $121,000 including GST (or $110,000 excluding GST) could yield an income tax saving of $30,250 for a small business subject to a 27.5 per cent tax rate and $33,000 income tax saving for a big business subject to a 30 per cent tax rate – plus the input tax credit of $11,000 on the vehicle.

Drive understands the maximum value of $150,000 – to claim as an instant asset write-off this financial year – only applies to certain types of motor vehicles and business uses. Drive recommends buyers get their own independent tax advice before signing on the dotted line or doing a deal.

Joshua Dowling

Joshua Dowling has been a motoring journalist for more than 20 years, spending most of that time working for The Sydney Morning Herald (as motoring editor and one of the early members of the Drive team) and News Corp Australia. He joined CarAdvice / Drive in 2018, and has been a World Car of the Year judge for more than 10 years.

Read more about Joshua DowlingLinkIcon
Chat with us!







Chat with Agent