PROPOSEDCHANGES TOFRINGE BENEFITS TAX 17 July 2013 AutomotiveHoldingsGroup (ASX:AHE) advisesshareholdersthatthe proposed changesto Fringe Benefits Tax provisions, announced yesterday by the federal government, are not expected to have anymajor orsustained effect on theGroup'slong-termbusinessmodel. AHGmanaging director BronteHowson said some ofthe headline reporting ofthe proposed changes had been sensationalist and largely unsubstantiated. "We read yesterday a headline thatsuggested the proposed FBT rules will cripple the carindustry," said MrHowson. "Frankly the automotive retail industry hasseen similar predictions of doomand gloomfromthe original introduction ofthe FBT to the carbon tax and the recentmanufacturing closure announcements, none of which have sentretailsalesinto a tailspin. "Novated lease salesrepresent a small, lowmargin element of our business,” he said. "Theremay be some short-termeffects on the new carsector but AHGis well placed to capitalise on the ongoing strength ofthe used vehiclemarket. We are strong in used carsales; our offering to customersis broad and includesrevenue streamsfromnew, used,service, parts and finance and insurance." While acknowledging theremay be a degree of uncertainty overthe proposed changes until after the federal election MrHowson said AHG's diverse income streams, including itsindustry leading logistics businesses, provide a hedge against any reliance on the company's new carsales operations. If eventually enacted,the coststo business of compliance with the proposed changes will increase andmay render novated leasesimpractical or unsustainable formany employers. We anticipate employee salary packages and allowances will inevitably be restructured, however companies with operationalfleetrequirements willstill purchase new vehicles and employees who lose company vehicles willmostlikely buy their own vehicles, new or used, underrevised salary and allowance packages.Subjectto how the specific FBT changes are applied AHGmay in fact benefitthroughmore direct relationships with customers who presently purchase through novated leases, and the elimination of marginsto intermediaries. Currentlow interestrate campaigns offered by a number ofmanufacturers continue to supportthe new carmarket. MrHowson said AHG'ssignificantmarketshare and broad portfolio offranchise dealerships would accommodate any change in consumersentimenttowardsthe type and price range of vehicles preferred forfleet or private purchases.
AHE Price at posting:
$3.78 Sentiment: LT Buy Disclosure: Held
