Demand picks up as leasing sector awaits U-turn on FBT

Car leasing companies have already experienced a turnaround in demand after the election, based on the Coalition's promise to reverse the Labor Party's changes to the fringe benefits tax.

Car leasing companies have already experienced a turnaround in demand after the election, based on the Coalition's promise to reverse the Labor Party's changes to the fringe benefits tax.

Many of them have begun re-hiring staff who had been stood down after Kevin Rudd announced a crackdown on FBT for cars in July.

Danny Wilson, director of leasing company NLC - one of the top five salary package providers for new cars in Australia - said his company had re-hired 23 of the 72 staff stood down.

"We started 23 people back at work this week and we'll keep an eye on demand, and if that keeps getting stronger we'll keep improving our staffing levels," he said. "We saw sales start to return almost immediately after the election.

"We're below what we're normally projected to be at this time but I think we're trending towards that 75 to 80 per cent mark. In terms of the sales levels, it does take some time for those to work through your system."

Tony Abbott had promised to dump Labor's changes if voted to power, re-introducing a statutory formula for business vehicles that provided significant tax concessions.

Despite the change in government, there is still some confusion at the consumer level as to whether the Labor government's FBT changes remain in force.

Gilbert Bratby, from the Manildra Group on the south coast, said his company had delayed purchasing new vehicles.

"My company is awaiting such clarity before we order, buy or lease any new cars. We have about five orders waiting," he said.

Australian Salary Packaging Industry Association president Leigh Penberthy said the industry was working with business, with the hope of attracting fresh demand.

"With the Liberal government now in place, there is no new law to be passed because there were no changes made to the tax law," Mr Penberthy said.

Mr Wilson expected fleet sales to remain relatively flat for the rest of the year.

"I would think that the remainder of the year will be softer than what we would have otherwise expected it to be but I'm sure that in 2014 we will see things really get back to full strength," he said.

Under changes made to the FBT in July, leasing customers were made to use a log book to detail variances between personal and business use of a leased vehicle.

The returning statutory formula method is much simpler and provides a tax concession to those who mainly use their car for private purposes because it assumes the main use is for business.