It’s been a joy to attend the final meetings for this financial year of our industry divisions. I share with members in this Viewpoint, some insights and views expressed. Remarkably, each voiced an optimistic outlook for the ongoing recovery of their industry from the COVID-19 pandemic’s restrictions and are confident about future business activities. Divisions reported those businesses that had shed staff at the start of pandemic have ‘now reemployed them and more’. This is not to say the pandemic’s invasive tentacles have been severed. Indeed, they are still alive, disrupting supply chains and business operations.
Our Australian Automotive Dealers’ division, although experiencing a strong bounce in the new car market since October 2020 after some 31 months of consistent negative results, now must adjust to stock shortages with some orders unable to be filled until 2022. As said in a previous Viewpoint, manufacturers misjudged consumer demand for new vehicles, curtailed output enabling the makers of the essential semiconductors to shift production to other electronic devices.
Interestingly, our Tyre and Undercar division drew attention to the supply of tyres due to factories experiencing a low level of production or no workload at all. Similar to the semiconductor shortage that has stifled the manufacture of new cars, a rubber supply scarcity has caught out both automakers and rubber componentry manufacturers. The global COVID-19 lockdown and the practice of the ‘just-in-time supply system’ has meant a slowdown in tyre production and the meeting of the automakers’ rubber requirements. There are other issues in play for the shortage, including the suggestion that the exporting countries of the ‘United States and Europe do not have the national stockpiles to draw upon in times of reduced supply – which the market is predicting for the near future.’ Additional challenges arise from freight, shipping times and the associated costs impacting stock levels resulting in wholesalers/retailers buying whatever is available in bulk in an attempt to keep stock levels reasonable.
Probably, it is our Rental Vehicle industry division that remains volatile and susceptible to COVID-19 outbreaks and lockdowns. On the upside, the demand for rental vehicles in the tourism hotspots such as the Gold and Sunshine Coasts, Whitsundays and Cairns has been strong: anecdotally, even to the extent of customers hiring utilities from Bunnings as they were the only vehicles to hire! On the downside, despite the strength in these markets, rental companies have a diminished fleet size due to the ‘rightsizing’ undertaken during Queensland lockdowns and softer months in 2020. New vehicle availability is an ongoing issue for businesses without the working capital to invest in new fleet.
Common to each of the divisions is the need for skilled and administrative staff to fill vacancies and meet increasing workloads. Queensland’s major newspaper reported that ‘industries across the board are warning of a jobs cliff, with shortages in critical areas, including vacancies for 4400 car mechanics state-wide’. This is not surprising, our north Queensland representative Mark Billingsley reported that generally, each workshop required an additional two mechanics and other qualified trade staff to be fully operational and meet client’s needs. Our Jobs Board too, is indicative of the employment opportunities in the automotive value chain.
Setting aside the issues that challenge, Divisional Chairs overall are upbeat about economic recovery for the near to medium term outlook. The Auto Parts Recyclers division are still smiling from the successful advocacy for the reduction in the annual fees paid to the Department of Environment and Science for automotive recycling activities. This meant a reduction from some $4000 to about $1692 per annum. The Commonwealth and State Governments industry support packages during the pandemic’s restriction and recovery phases ‘kept most recyclers afloat and now thriving’.
Undoubtedly, the division with the widest smile belongs to our Automotive Remarketing division. The used car market Is buoyant. The primary challenge is finding the quality stock and responding to the new issue of insurance and finance values failing to keep pace with the market impacting a client’s ability to finance and insure their purchase. Pleased too, with the economic outlook is our Farm and Industrial Machinery Dealers’ division. Tractor, machinery and parts sales are in demand after years of drought, and agriculture now is making a strong contribution to local economies and businesses. Also ‘riding the wave of increased business since COVID-19 started’ is our Engine Reconditioners division, although parts supply from manufacturers is a major issue. Our Automotive Engineers division and our National Auto Collision Alliance report busy workshops and increasing workloads.
Advocacy
Divisions’ members, through their workshops on a daily basis, feel the pulse of the economy. Their views are important as they contribute to the content of the Association’s advocacy to both the Australian and Queensland Governments. The recent Commonwealth Budget (11 May) included initiatives that we nominated as priorities in our pre-budget submission for the automotive value chain. The State Government’s budget will be delivered on 15 June to which we submitted member’s priorities.
The role of divisions, defined in the Objects of the Association’s constitution, is critical to the function of the MTA Queensland. The divisional policy positions and views on trade/industry issues are represented by their Chair on the MTA Queensland Board. I and other MTA Queensland staff attend each divisional meeting to engage, assist with policy processes and undertake any advocacy to advance the issue with the appropriate department or agency either in direct communications or in written submissions.
A recent significant achievement was the reform of the laws governing the repairs standards for written-off vehicles announced by the Minister for Transport and Main Roads Mark Bailey. Included in the changes was the requirement for light vehicles, which are considered uneconomical to repair, will be categorised as statutory written-off vehicles and become ineligible for reregistration. Vehicles will then only be permitted to be repaired where they meet specific exemption criteria. This includes ensuring written-off vehicles being reregistered for sale do not contain stolen parts; and prevent substandard repairs and rebirthed vehicles from being on the roads. These reforms have been a long-term objective of our Automotive Remarketing Division.
Chief Executive Officer Rod Camm and I gave evidence before the Parliamentary Transport and Resources Committee Inquiry into Vehicle Safety, Standards and Technology, including Engine Immobiliser Technology to which we had provided a written submission.
The Committee was focused on vehicle safety and the written-off-vehicle scheme.
On a regular basis, the Motor Accident Insurance Commission seeks the views of selected stakeholders on the current factors and trends influencing the cost of insurance under the statutory insurance scheme (Compulsory Third Party). We’ll respond, indicating a preference for no change to the $351.60 (annual) premium for the Class 1 Vehicle on the basis the up-coming State Budget more than likely will increase vehicle registrations (new and renewal) above inflation.
Finally
Member’s attention is drawn to extension of the 2020-21 Budget measure titled JobMaker Plan — temporary full expensing to support investment and jobs for 12 months until 30 June 2023. The extension will allow eligible businesses with aggregated annual turnover or total income of less than $5 billion to deduct the full cost of eligible depreciable assets of any value, acquired from 7:30pm AEDT on 6 October 2020 and first used or installed ready for use by 30 June 2023.
Until next month, take care and stay safe.
9 June 2021