Australia, officialy the Commonwealth of Australia is a sovereign country comprising the mainland of the Australian continent, the island of Tasmania and smaller islands.
One of the major changes occuring in the Australian automotive industry, is the cease of local vehicle production. Ford stopped assembling in 2016, Toyota and Holden also announced to cease local vehicle production in 2017.
|Major cities|| |
Sydney, Melbourne, Brisbane, Perth
56,327.72 USD (2015)
|Unemployment rate|| |
5.7% (May 2017)
|Main industries|| |
GDP Composition by Sector:
Industrial Production Growth Rate:
AUD Australian dollar
|Interest rate|| |
|Political key info|| |
Australia is a federal parliamentary constitutional monarchy.
Australia ranks as one of the best countries to live in the world by international comparisons of wealth, education, health and quality of life. The sixth-largest country by land mass, its population is comparatively small with most people living around the eastern and south-eastern coastlines.
The country's first inhabitants, the Aboriginal people, are believed to have migrated from Asia tens of thousands of years before the arrival of British settlers in 1788. They now make up less than 3% of Australia's 23 million people.
Years of mass immigration after the Second World War heralded sweeping demographic changes, making modern Australia one of the world's most multicultural countries. But migration continues to be a sensitive issue politically.
In shaping its foreign and economic policy, Australia first looked to Europe and the US but in the last 20 years has developed stronger ties with Asia. It has acted as peacekeeper in the region sending missions to Solomon Islands, East Timor and Papua New Guinea.
Although Australia remains part of the Commonwealth, the future role of the monarchy has been a recurring issue in politics. An aging population, pressure on infrastructure and environmental concerns such as climate change are some of the long-term challenges facing the country.
|Total Car park|| |
|New vehicle registrations (Cars, LCV, Trucks)|| |
In 2016, the Australian new vehicle market reached 1.178 million.
|Top 5 brands (total market)|| |
|Model preference top 5 (total market)|| |
1. Toyota Hilux
|Dealer network (including fleet dealer network)|| |
The motor vehicle dealers industry in Australia experienced a steep decline in revenue and employment in the immediate aftermath of the global financial crisis. However, the industry bounced back well in 2009-10 with pent-up demand for new vehicles following a period of financial uncertainty and instability. It took a number of years for market to stabilise but now seems to be in a strong place with a gradual increase in establishments forecast in the future.
Despite a number of sectors in the automotive industry set to be hit hard by the impending closures of automotive manufacturers, it is predicted that motor vehicle dealers will continue to play a part in the market place as consumers will need an outlet to upgrade and replace vehicles. There is a shift in the types of vehicles being purchased with an emerging preference for new cars with updated technology, smaller, more fuel efficient cars, diesel cars, hybrid and electric cars.
|Used car market/renewal cycle|| |
Average lifecycle is 10.8 years.
|Total Fleet Park (company cars)/Fleet penetration in total fleet sales|| |
1 million, approximately 5% of the total number of vehicles
|Evolution fleet sales (last 5 years)|| |
Private buyers represent 51% of new registrations, business fleets 41% and governmental sales & rental 8%).
|Top 5 fleet brands (fleet market)|| |
|4.1 Car Taxation|| |
Vehicle Stamp Duty in Australia by State ACT
Stamp duty on new vehicles in the ACT is charged as follows:
3% of the vehicle price inclusive of GST up to $45,000
5% for every dollar over $45,000
New South Wales
Stamp duty on vehicle purchases is charged as follows:
3% of the vehicle price inclusive of GST up to $45,000
5% for every dollar over $45,000
Example - a car costing $65,000, stamp duty would be charged at 3% of $45,000 plus 5% of $20,000 (the amount above the $45,000 threshold) = $1,350 + $1,000 = $2,350
Electric/Hybrid (any number of cylinders): 2%
All other cars:
up to 4 cyl: 3%
up to 6 cyl: 3.5%
7 or more cyl: 4%
Tractors & mobile machinery: flat rate of $25
Victoria has three thresholds for stamp duty charges though the percentage applies to the total market value of the vehicle.
2.5% of the vehicle price up to $35,000
4% of the total price where this lies between $35,000 and $45,000
5% of the total price where this is over $45,000
South Australia has a low threshold that must be observed
$60 for the first $3,000 of the purchase price (or part thereof)
4% for every dollar over $3,000
Tasmania has a structure based on three price margins
3% of the purchase price up to $35,000
11% for every dollar between $35,000 and $45,000
4% for every dollar over $45,000
WA has probably the most complicated stamp duty structure in Australia!
2.75% of the vehicle price up to $20,000
A sliding scale is used between $20,000 and $45,000 from 2.75% to 6.5%
6.5% for every dollar over $45,000
From January 1st 2009, the rates will change to:
2.75% of the vehicle price up to $25,000
A sliding scale is used between $25,000 and $50,000 from 2.75% to 6.5%
6.5% for every dollar over $50,000
Remember that for new vehicles, stamp duty should always be included in any on-road cost.
Luxury Car Tax
On top of state taxes, the federal government have GST & the luxury car tax (Paid to the ATO).
What is the luxury car tax threshold?
The luxury car tax threshold is equal to the car limit, which is $57,123 for the 2007–08 financial year. The tax is applied to the Ex GST & ex Stamp duty price.
The 2008 budget has raised this tax to 33%
Info sourced from: the ATO website.
Luxury Car Tax is payable to the Australian Tax Office for all vehicles purchased whose price exceeds the luxury car tax threshold (currently $57,009) except for the cases described below.
Luxury Car Tax is payable only on the purchase amount exceeding this limit - not the entire purchase price.
In short, Luxury Car Tax is calculated as 33% of the GST exclusive portion of the vehicle purchase price over $57,009. It can be calculated using the following steps:
Calculate the amount subject to LCT. Take the full price of the vehicle and subtract $57,123. For example a vehicle whose GST inclusive price is $100,000 has $100,000 less $57,123 which equals $42,877 subject to Luxury Car Tax
Find the GST exclusive portion of the above figure. The easiest way to do this is to multiply the figure by 10 and then divide by 11. In the above example: $42,877 x 10 / 11 leaves $38,979
Thirdly multiple this above figure by 33% to calculate the LCT component on the vehicle price. In our example $38,979 x 33% leaves $12,863 of luxury car tax.
The Luxury Car Tax should then of course be added onto the GST inclusive price of the car. The supply price for the above example would be $112,863.
|4.2 Income tax – Taxable persons||A car is taken to be available for the private use of an employee on any day that they or their associates: |
use it for private purposes
are allowed to use it for private purposes.
If a car is garaged at or near your employee's home, even if only for security reasons, it is taken to be available for their private use regardless of whether or not they have permission to use the car privately. Similarly, where the place of employment and residence are the same, the car is taken to be available for the private use of the employee.
Generally, travel to and from work is private use of a vehicle.
|4.3 Company car||For fringe benefits tax (FBT) purposes, a car is any of the following: |
a sedan or station wagon
any other goods-carrying vehicle with a carrying capacity of less than one tonne, for example a panel van or utility (including four-wheel drive vehicles)
any other passenger-carrying vehicle designed to carry fewer than nine passengers.
|4.4 Income taxes – drivers’ personal taxation|
|4.5 Electric vehicles||An Australian Tax Office ruling has provided a major boost to the economics of electric vehicles in Australia, just as enthusiasts prepare to queue up to register interest to buy the first mass-market electric vehicle to be offered in serious volume in this country. |
The ATO ruling means that drivers of electric vehicles will be able to claim the same deductions for business use as they currently do for cars running on internal combustion engines.
|4.6 Future developments|
|4.7 Legal background (import taxes)||Both the Department of Infrastructure and Transportation and the Australian Customs Border Protection Service state categorically, "Do not import a vehicle into Australia before obtaining a vehicle import approval." |
If the car or any other vehicle meets certain criteria, this permit is available from the Department of Infrastructure and Transport.
The Department of Customs then imposes a levy on the car. This has two components - Duty and Goods and Services Tax (GST). These are the figures:
Vehicles over 30 years old and motorcycles 0% Duty / 10% GST
New and used vehicles up to 30 years old 10% Duty / 10% GST
Four wheel drive off road / commercial vehicles 5% Duty / 10% GST
If the car you want to import has a GST inclusive value of $57,466 or more (as of 2011), it will be subject to Luxury Car Tax (LCT). This tax is in addition to the other charges listed above and is levied at 33% of the value above the $57,466 threshold.
Company car entitlement:
Which sectors provide most fleet cars?
Pharmaceutical, Medical, Technical services, Agriculture, Mining, Construction, Telecom
Which job functions often include a company car?
Sales reps, technicians
|Entry level / junior sales||Hyundai Accent Active Hatch / Sedan |
Hyundai i30 Active Hatchback
Toyota Corolla Ascent Hatch
Hyundai Elantra Active Sedan
Ford Focus Trend Hatch/ Sedan
|Senior sales / Management level||Toyota Aurion AT-X Sedan |
Ford Mondeo Zetec Hatch
Hyundai i40 Elite Sedan/Wagon
Hyundai ix35 Highlander (AWD) Wagon
Ford Falcon XT Sedan
Isuzu DMax Dual Cab Utilit
|Executive level||Toyota Aurion Sportivo SX6 Sedan |
Ford Falcon XR6
Toyota Kluger KX-R (FWD) Wagon
|Overview of penetration of funding methods (buy or lease statement)|
|Key Market players in fleet management|| |
- Alphabet Australia
|6.1 Outright purchase:|
|Definition||Vehicle is registered as a fixed tangible asset on the balance sheet at the acquisistion value and depreciated over total useful economic life|
|Pro’s and con’s|| |
|Economic & legal ownership||Full ownership, included Risks asd Rewards|
|6.2 Renting (Finance lease) :|
|Definition||The vehicle is purchased by the financier, referred to as the Lessor and rented to the borrower, referred to as the Lessee in monthly instalments. The Lessee would still usually be able to source the vehicle and negotiate the price themselves.|
|Pro’s and con’s||Unlike other business use car finance, the ability to claim the whole repayment as a tax deduction is available. Often clients may misunderstand this as a greater tax deduction overall and is not always the case due to the vehicle being owned by the Lessor, so the deductions for depreciation are not available under a Lease Agreement for the Lessee and the amount of deductions may also be determined on individual tax brackets. It is recommended to get professional tax advice prior to deciding which business use structure is best for your own circumstances.|
|Economic & legal ownership||When the Residual Value is due and payable, the option to Lease this over a new term may be available and the ownership of the vehicle remains the Lessors. The other options would be to payout the Residual Value as a cash settlement, which may be done from the sale of the vehicle, or to payout the Residual Value from the Lessee’s own funds via cash or financing and if this was the case the ownership of the vehicle becomes the Lessees, by purchasing the vehicle from the Lessor for the Residual Value.|
|6.3 Full service leasing (operational leasing)|
|Definition||Operating Lease is set up in the same way as a Finance Lease, but the Lessee (borrower) does not take on the obligation of the Residual Value and hands the vehicle back to the Lessor (financier) at the end of the term, rather than looking for options to payout or refinance the Residual. There is the option to include maintenance as part of the Lease Agreement within an Operating Lease. This would be referred to as a Maintained Operating Lease, or a Fully Maintained Operating Lease.|
|Pro’s and con’s|| |
+ Off Balance Sheet
- Subject to usage and condition terms
|Economic & legal ownership||Ownership remains with the lessor|
|Business practices||A lot of financiers have steered away from Operating Leases due to the risk of the Residual Value not being worth the market value of the car at the end of the term, but they are still available in the market and are favoured by companies with large fleets of vehicles|
|6.4 Fleet Management|
|Definition||A Novated Lease is a three way agreement between the Lessor (financier), the Lessee (borrower/employee) and the Lessee’s employer. It allows the Lessee to have the ability to salary sacrifice their Lease repayment, which can reduce their taxable income which can save them on income tax.|
|Pro’s and con’s||If the Lessee’s employment was terminated with the business noted in the Novation Agreement prior to the term of the Lease, all repayment obligations would become the Lessees including the GST in the rental payment. This is why Novated Leases are becoming popular with employers as if their employees leave, the employer is not left with any Lease obligations.|
|Economic & legal ownership||Lessor|
|6.5 Short term rental|
|Pro’s and con’s|
|Economic & legal ownership|
|6.6 Other funding methods|
|Novated Lease|| |
Novatad lease is a unique funding method in Australia and has gain increasingly popularity over the recent years. A novated lease combines many features of more traditional forms of vehicle leases to deliver some attractive benefits for employees and employers.
* Source: Australian Fleet Management Association
Fuel Type Segmentation
Fuel Price Evolution
- Australian consumers clearly benefit from the highly competitive fuel market where retail petrol and diesel prices are among the lowest in the developed world.
- Country pump prices are generally higher and more stable than metropolitan prices due to differing competitive and economic characteristics
- Retail (pump) prices can be volatile in some markets, reflecting intense local market competition
2012: 1.36 USD/L , 2014: 1.4 USD / L, 2016: 0.81 USD / L, 2018: 1.13 USD / L
The major oil companies directly own and operate only a limited number of service stations across Australia (around 10%) and these are largely in metropolitan areas.
There are over 5,000 Service Stations in Australia.
Fuel Card Solution
Easily available. Credit card and fuel card solutions
Similar to EU, TCO for the Australians means :
- Capital and intrests
- Services (maintenance, tyres, insurance)
9.1 Accident Rate
Road fatalities per1000,000 inhabitants per year : 5.4
Road Fatalities per 100,000 motor vehicles: 7.3
Total Fatalities latest year (WHO Report): 1252
9.3 Insurance offers
- Compulsory Third Party (CTP)/mandatory motor vehicle accident personal injuries insurance – required by each state and territory. It protects any person that you might injure while you are driving. It is not an alternative to taking out a motor policy to cover your financial liabilities, such as damage to another vehicle or property, or your own vehicle
- Comprehensive – covers damage to your own vehicle and other people’s property, as well as theft and some other risks, plus legal costs
- Third Party Property - covers damage to other people’s property and legal costs, but not damage to your own vehicle
- Third Party Fire and Theft – Third Party Property with some add-on features that cover your vehicle
10.1 Trends in taxation, legislation
11.2 Mobility Conditions
Australia is only discovering corporate mobility services. Car sharing / pooling is not popular and cities/governements are not promoting a mobility vision. Due to its geography and city repartition, a country-wide mobility program will be difficult to fill in and is most likely to happen in the Sydney - Melbourne axis.
11.3 Mobility Conditions
Infrastructure Partnerships Australia and Uber have partnered together to produce Australia’s first regular measurement of road network performance – the IPA Transport Metric – spanning: 1. Sydney; 2. Melbourne; 3. Brisbane; and 4. Perth. The IPA Transport Metric, released for the first time in this paper, measures travel times across the day – providing new information about how the road network performs in the morning and afternoon peak periods, as well as shoulder and non-peak periods, across three zones: 1. CBD zone; 2. the inner metro zone; and 3. outer metro zone. Uber’s experience running ridesharing services across Australia has the potential to inform and improve urban planning. The IPA Transport Metric leverages data collected from Uber’s ridesharing network to do just that. The IPA Transport Metric captures data from Uber trips, through which a network of data is collected. Each trip is a mobile collection point for key traffic metrics such as travel times. This use of on-vehicle measurement systems will provide a wider, more detailed and granular picture of how the use of our cities’ transport systems evolves over time.
Fluctuating fuel prices
Austrialia's geographical isolation brings ever-fluctuating fuel prices, making it difficult for fleet managers to oversee the operational costs of their business.
Roadworks and traffic delays are causing a major waste of fuel.
Fuel card misuse
80% of fleet owners are worried about potential abuses, says Australian Transport News.
Australia has a very dynamic telematics industry. Berg Insight forecasts that the number of fleet management systems will graw by 16% to 1.1 million systems in 2020.The local suppliers EzY2c and Coretex as well as the international vendors Mix Telematics, Ctrack and Geotab have comparably strong presence.
Future of Fleet Management