The Federal Government's tax increase on luxury cars has been blamed for a fall in vehicle sales in July.
But the Federal Chamber of Automotive Industries said continued high petrol prices, interest rates and the general economic downturn were also factors in the 2.7 per cent slide in demand.
In its latest VFACTS sales bulletin, the Federal Chamber of Automotive Industries said 83,976 new vehicles were retailed last month compared with 86,291 in the same month last year. The market remained ahead on a year-to-date basis, total sales to the end of July still 2.6 per cent higher than at the same period in 2007.
Federal Chamber of Automotive Industries chief executive Andrew McKellar said, ''Higher fuel prices, interest rates and the wider economic uncertainty have resulted in a slowing of people heading to showrooms.''
But he said the figures revealed a 33 per cent slide in sales of cars over the luxury tax threshold compared with June this year. In the budget this year the Federal Government announced a decision to lift the luxury tax on cars priced over $57,123 from 25 to 33 per cent from July 1.
The legislation confirming the changes is yet to be passed with the measure referred to a Senate committee. In the meantime, some car companies have opted to factor in the higher charge.
''The proposed tax hike has had a devastating impact on new car sales,'' Mr McKellar said.
''It is clear that the downturn has been exacerbated by the impact of this unfair tax hike and the industry has significant concerns that orders will continue to be affected in coming months.
''If this situation continues, the Government will not receive the additional revenue it had projected, and there is a real risk that it will cost jobs. In these circumstances, one would have to question why the Government would pursue this tax increase.''
When the tax increase was announced, Treasurer Wayne Swan said the measure was expected to raise $555 million over four years.
With no changes in the tax since it was introduced in 2000, the Government believed it was an appropriate time for an increase.
''The Government believes that Australians who can afford luxury vehicles have the capacity to contribute to revenue at a higher rate than other car buyers,'' he said.
Toyota was again the market-leading company last month with 20,521 new vehicles, ahead of Holden on 11,148 and Ford on 9464.
The company was also on top for the first seven months this year with 147,961 vehicles, compared with Holden on 78,271.
Toyota Australia's senior executive director of sales and marketing, David Buttner, said the overall market remained ahead of last year's record levels.
''Some segments continue to thrive in the face of high petrol prices and interest rates,'' he said.
He said some observers might also be surprised to see the increase in demand for sports utility vehicles this year. ''However, we believe this is due to the added flexibility they offer extra seats, more elbow room and greater luggage space as well as good performance,'' he said.
With petrol prices remaining high, the Federal Chamber of Automotive Industries said small-car sales were up 3.5 per cent so far this year, while demand for large cars had crashed by 15.3 per cent, partly explaining the 11per cent increase in demand for SUVs.
But the Holden Commodore was the top-selling car last month with 4906 sold, ahead of the Toyota Corolla on 4476. AAP