New-car sales hit the brakes in May but cheap utes drove out of showrooms

A pair of $20,000 utes have taken advantage of a new tax deal for small businesses, but the rest of the car industry is stuck in neutral.

Cheap tradie utes bolted out showroom doors last month as small businesses appeared to be quick to take up the Federal Government's tax incentive on $20,000 company vehicles.

Sales of the most basic versions of the Toyota HiLux ute increased by 12.4 per cent while the Mitsubishi Triton -- both of which scrape below the $20,000 threshold -- surged by a staggering 42.7 per cent, as both brands cleared old stock and took advantage of new tax rules.

However, the actual number of bargain basement utes delivered was relatively small (996 Toyotas and 421 Mitsubishis), and they appear to be the only two winners in a dark month for the rest of the car industry.

New-car sales hit the brakes for the first time in four months in May, figures due to be released by the Federal Chamber of Automotive Industries at midday Wednesday are expected to show.

The number of new cars reported as sold was down by 1.3 per cent compared with the same month the previous year, to 93,327 deliveries, making it the weakest May result in four years.

The tally has surprised the industry as it had been forecasting another record after a strong start to the year. Sales year-to-date, however, are still up, by 2.5 per cent.

Half of the Top 10 brands were down, including market leader Toyota, Holden, Ford, Hyundai and Nissan -- and German car maker Volkswagen closed to within just 460 sales of former top-seller Ford.

The Toyota HiLux ute was the top-selling vehicle across all types -- for the 14th individual month since 2008 and the first time in almost two years -- however its sales were down by 4 per cent (once all versions of the HiLux are tallied) compared with the same month last year.

Sales of utes in general were down by 0.9 per cent, as the majority of models fall outside the Federal Government's $20,000 threshold on company purchases.

The car industry warns it is too early to determine if the Federal Government's stimulus package -- which is due to run until the end of the 2016/17 financial year -- is a success or a failure.

"None of us were ready for it, it was really only the last two weeks of the month, and there were really only a handful of cars across the entire market that were eligible," one Toyota dealer told News Corp Australia.

"This deal will be around for a while so I think you will find several brands try to put something together that meets the $20,000 criteria," said the industry veteran.

Following changes announced in last month's Federal Budget, small businesses and sole traders will be able to claim a deduction on company assets valued up to $20,000 in this financial year, rather than have the refunds spread out over eight years, as is usually the case with motor vehicles.

The changes mean sole traders will be eligible for a refund of up to $8500 on a $20,000 work vehicle, while small businesses could pocket up to $5400 -- providing quarterly tax instalments or pay-as-you-go taxes are up to date.

Sole traders in the maximum tax bracket of 47 cents in the dollar stand to make the most gains, while companies with a turnover not exceeding $2 million may be eligible for an instant tax refund of 30 cents in the dollar on $20,000 purchases.

Private buyers, however, will not benefit from the new scheme.

Meanwhile, the industry is bracing for a boom in June, customarily the biggest month of the year for new-car sales.

Top 10 brands in May 2015

Toyota - 15,928 - down 7.6 per cent
Mazda - 8717 - up 12.5 per cent
Hyundai - 8269 - down 1.6 per cent
Holden - 7956 - down 11.7 per cent
Mitsubishi - 6149 - up 6.4 per cent
Ford - 5994 - down 13.8 per cent
Volkswagen - 5534 - up 12.5 per cent
Nissan - 4467 - down 28.9 per cent
Subaru - 3776 - up 14.4 per cent
Honda - 3086 - up 21.5 per cent

Top 10 cars in May 2015

Toyota HiLux - 3173 - down 4 per cent
Mazda3 - 2876 - down 12.6 per cent
Toyota Corolla - 2688 - down 30.6 per cent
Mitsubishi Triton - 2679 - up 18.8 per cent
Ford Ranger - 2411 - up 4 per cent
Holden Commodore - 2217 - down 16.3 per cent
Volkswagen Golf - 2093 - down 9.0 per cent
Mazda CX-5 - 1981 - up 15.5 per cent
Hyundai i20 - 1920 - up 36.6 per cent
Hyundai i30 - 1666 - down 34.7 per cent
 
Source: Federal Chamber of Automotive Industries. Sales in May 2015 and the percentage change compared with the same month last year.