LCT hike needs rethink, says Chrysler boss

CHRYSLER Group Australia managing director Gerry Jenkins has told GoAuto that the luxury car tax increase (LCT) has triggered a scaling down of sales of the American brand’s products affected by the tax.

“We’ve seen the effect of LCT since the government announced it, absolutely no question,” Mr Jenkins told GoAuto recently.

“It’s affected (our luxury car sales), no question. I estimate we’re down around 15 per cent. We’re off significantly.”“I understand it is very important for the government, but I really don’t see the benefit of it, to be quite honest. Why call it a luxury tax? Clearly there is a big drop-off in sales above that level, so I don’t think it’s beneficial for anybody.”

Left: Jeep Commander, Chrysler 300C and Grand Voyager.

“We have several vehicles that are affected by it: Grand Cherokee, Commander, 300C, Voyager. It’s a pity that they have been constrained in their appeal because of this artificial tax.”Mr Jenkins said Chrysler had other products that have been doing well under the LCT, which had softened the blow. But he added that selling a larger volume of cars under the LCT than over was is not necessarily good for the bottom line.

“It helps us put the numbers on the board – but with much thinner margins, as you would expect,” he said. “Most of our money is made with vehicles above the LCT, not below the LCT, so from a profit point of view it has been very taxing on us.”Mr Jenkins believes that the new legislation does not achieve what he sees as the government’s purpose.

“At the end of the day, the purpose of the LCT is to certainly enrich the coffers of the government, but what’s happening is the volume is going away from those cars so consequently they’re not collecting the LCT anyway. So they really need to re-think that strategy.”

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