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Holden, Ford, Mitsubishi and Toyota have asked the Australian Government to restrict further drops in tariffs come 2010. The current tariffs are 10% with a proposed reduction to 5% in 2010. The 4 Australian manufacturers are scared that at 5 per cent, the low tariffs will drive the Australian manufacturing process inviable as the cost of imported cars reduce even further.

If that wasn’t enough, they have also asked the federal government to inject a further $1 billion into the industry to help it survive. The reason for this demand is mainly due to poor sales by Australian manufacturers. Without going into another Falcon and Commodore bashing rant, I have to say I am a little disappointed. Currently the Australian tax payers are already set to pay 4.3 billion dollars in the next 10 years to help keep the industry alive. So these demands seem a little excessive!

The problem seems to be that local manufacturers have really missed the big picture, the days of the big family car are numbered. Australians are waking up and realizing that perhaps there is no need to go for a six cylinder engine anymore and even if not that, that there is far more choice in the market these days than 20 years ago! And this revelation has really hurt the Australian car industry. Don’t believe me? Well the facts don’t lie, in 1988 70% of cars sold in Australia were Australian made, in 2006? 20%, thats a 50% drop in 18 years and the trend is only continuing!

And its not because Australian aren’t buying new cars, infact last year was the highest year to date record for New car sales in Australia, with 2006 set to become the 2nd highest. So when will the local manufacturers take a gamble on a smaller car? How could Mitsubishi justify spending so much money on the 380? Sure its a great car, well equipped and comes with one of the best warranty packages in the country, but the market for a family car is slowly deminishing and with the Falcon, Commodore and Camry/Aurion leading the charge, why would Mitsubishi invest so much into an almost assured failure? But more importantly, why do we, the Australian tax payers, have to pay for their mistakes?

So I am not a cruel bastard, I do know that the Australian car industry hires a great deal of people, (around 70,000), but nonetheless, the big issue here is that local manufacturers keep asking for more money and demand high tariffs for imports so that they can remain competitive. These demands are very short-term minded and it should only be obvious that perhaps a change of “plan” would be the way to go for the local manufacturers? I do have to hand it to Toyota though, they have done well with the Aurion and Camry, and the new VE commodore really does take the Commodore to a new level.

But when the government is involved, at the end of the day, politics is about getting votes, it doesn’t matter how responsibly funds are managed, as long as it insures reelection, all is good, so with that in mind, Industry Minister Ian Macfarlane mentioned that the Government was concerned about the local car industry’s viability.

It is not an issue of can we sustain four manufacturers. It is what numbers of vehicles do we need to sell in Australia to maintain a construction industry here,” Mr Macfarlane said.

So why are the big four making these demands now? Its mainly because the government is set to release a new industry policy blueprint next year. Thankfully though, Mr Macfarlane hasn’t exactly been a sympathetic ear for the car companies:

They asked for a decade of certainty. Less than a year into the deal, it is very early to be saying, ‘we want a complete review of the plan’,” Mr Macfarlane said.

“Australia has traditionally preferred medium-large cars and I guess that is the challenge for manufacturers over the next 12 months, I am confident that the cars we produce here are as good as any in the world and I drive two of them. How many manufacturers can we have here? That is really up to the manufacturers.” he said.

One of the key aspects that will maintain the Australian car industry is to focus on exports, GM Holden and Toyota already export a great majority of cars overseas. Holden’s Calais range can be found all over the middle east, so the situation isn’t all that bad. Australian vehicle manufacturers currently export over 100,000 vehicles to the middle east each year, with a value of almost $2 billion.

I eagerly await the day GM Holden or Ford announce plans to build a 4 cylinder medium car here in Australia! Its good to see others share my opinion, with the likes of Aussie motoring sharing my point of view!

  • http://www.aussiemotoring.com Stuart

    Isn’t it amazing, the writing has been on the wall for years and yet they still keep turning out the big cars even though people aren’t buying them.

    Recently I went shopping for a car for my daughter here in Hervey Bay. This is an affluent town where people are not afraid to spend money. One of the salesman I spoke to told me that they could hardly keep up with the demand for small cars.

    More and more people were trading in their big sixes and buying smaller 4 cylinder cars. The Kia dealer couldn’t show me a new Rio or Cerato because they were sold before they arrived.

    The Holden dealer had no Barina’s or Astras on the showroom floor because they couldn’t keep up with the demand either.

    The Toyota dealer had one Yaris and one Corolla and the Mazda dealer had one Mazda 3.

    But there were plenty of Falcons and a few Commodores in the dealer’s yards.

  • Simon

    As a takpayer I have huge problem paying to keep these companies going when they seem to be unable to plan effectively. I would also hate to see 70,000 families effected by job losses however do we need to build cars in this country?

    I think it had a lot more to do with national pride than common sense. I’m sure there are much more worth while causes that could benefit the country and create jobs. Afterall if we are going to allocate taxpeyer dollars for pride then lets sink billions into the Aussie alternative to Boeing and Airbus or what about entering the space race..that could be fun.

  • http://www.alborzfallah.com alborz

    I agree Simon, I don’t know why the Australian Tax Payer has to support the car industry. Both GM and Ford are also failing in the US for the same reasons, building big cars that no one wants!

    I also agree that perhaps if local manufacturers are going to rely on tax payer money to keep afloat, perhaps its better to spend that tax payer money creating a new industry as you said, it would be great to build planes here!

    However, it seems like there is absolutely no question in terms of the aid provided, its not a matter of “why are the tax payers paying money to car companies” but a question of “how much should tax payers be paying”. I don’t understand how the car companies can take our money, build unpopular cars, and then complain that we are buying other types of cars!

  • http://chariot.net.au mark

    I think/believe that Mitsubishi are hanging in there because of that Japanese thing,SHAME or SAVING FACE.I believe also they want to see if they can leave on the back of another local AUSTRALIAN car manufacturer that may pull out of AUSTRALIA if possible, so it takes some of that shame factor away from them. Otherwise there is no logical business reason to keep going.I also believe that most AUSTRALIAN’S couldnt care less if they pulled out ,it’s just a waiting game.If they were to leave,they may be able to carry any spare parts on the line back to JAPAN in the hand luggage.

  • Ian

    The Australian Consumer is being ripped off. The cars are substandard low spec and overpriced. Explore any global market take taxes out of the equation and the franchise holders in Australia are rorting it. (and the second hand car dealers)
    How come little old deregulated NZ gets the Nissan Primea, Daihatsu, B4 tricked up Subarus, all new from the franchises. Base models with electric windows and aircon as standard.
    Toyota kept their manufacturing plant in NZ and uses it for tidying up 2nd hand Toyotas to as new condition and sells them with a 3yr unlimited km warranty. The sooner the tariffs come off the better along with deregulation of used imports. You might get more airbags and safety features out on the roads!!

  • http://www.alborzfallah.com alborz

    I agree,
    the government is keeping the australian car makers in business by giving them our tax payer money, its not like the Aussie cars are even cheap!
    they are expensive!

  • David

    If they aren’t financially feasible without taxpayer subsidies, let them go bankrupt as soon as possible. I drive imports for a good reason – the quality and overall value of our locals doesn’t come remotely close

  • Jack

    Disagree fellas!

    Why should Australia be the nation to lower its tarrifs so excessively?*

    What of the other manufacturing nations? Is it easy, say, to import a car to Japan from anywhere else? As far as I know, they keep their subsidised walls high, impenetrable so their domestic industry can thrive. Germans? Subsidised.

    Tried to compete against the Americans on agricultrural produce, or the EU for that matter? Let’s destroy our Single Desk, that’ll help ’em further!

    If we are to destroy our manufacturing capacity in auto manufacturing, textiles, consumer goods, hell, even food, how shall we actually earn currency from other countries? Mining won’t last at these prices forever, it is extremely cyclical. What will be left afterward?

    Where will your standard of living come from if you cannot, as a country, earn it in the world? If you destroy auto manufacturing, it will be much harder to reestablish it if needed in the future.

    When my parents emigrated, pre-Button plan, there were eight local auto manufacturing companies. Local produce was lambasted for quality (still is, so what really changed Mr Button?). And both before and after this our cars were exported. Now there are four companies.

    Arguably they are making the wrong product (but not for most of the populated Australian landmass, which is not urban). However, perhaps the shrinking in size of consumer car choice can be best correlated to the overall shrinking in average taxpayer earnings – inflation adjusted – taking place since the 1970’s. If you can’t afford it…….

    And the posters above are only too keen to see the number of Aussie manufacturers slip.

    Which brings me back to my first question, marked with an * : we were over 95% foreign owned, as a country, at the turn of the millennia. Of course our foreign owners want Australians to buy their goods, and as they own a great majority of the country, they can enable this through an open market (nearly unique in the industrialised world).

    We will come to a crossroads when it will become patently obvious that our ‘imported’ standard of living cannot be supported by what we earn; and how we will wish for a viable local alternative.

  • aaron

    jack is exactly right iv just come from living in europe and the standards of cars are no better than here in fact in some cases much worse they have all the same issues as us and have a fiercly protective auto industry wherever you go if you go to france its only citreons and renault, germany bmw, audi,etc , italy fiat and so on why are we the only country not to have pride in our own produce we should be bying australian and keeping the money in our country where it benefits us so that industries can prosper like the big foreign corporatios that dont give a rats arse about australia believe me i know first hand

  • http://www.luxurycampers.com Greg

    Thank god Aaron and Jack brought some logic to the discussion. When are the rest of you import loving self loathers going to be satisfied? When we’re all driving tinny asian front wheel drives?- all highly subsidised of course – and shipping raw materials overseas to bring it back as manufactured goods?

    The cap-backwards crew will always squeal but our big cars are arguably the best in the world as confirmed by the head of Toyota Australia (John Conomos)when he stated that Facons and Commodores represented ‘remarkable quality and value for money’

    It was only a few years ago when Ford Oz were making record profits with the BA and if you look at the top selling cars for the past ten years, its Commodore and Falcon.

    I agree that they could be doing more – especially with LPG and diesel but what’s so brilliant about the imports. Why did Nissan go broke and is now owned by Renault? Why is Mitsubishi still teetering? Why has Toyota dropped below Ford and GM in the quality ratings?

    And why are people rushing headlong into small cars. COME ON – the human being is a natural tight-arse. Even though petrol is cheaper than bread milk and food in general, Aussies have been brought up to whinge about petrol prices – and they will sacrifice comfort, safety, versatility, jobs for their kids and pride in local product if they can save 5 bucks at the petrol pump. Always have done.

  • Dave

    It is cheaper to produce cars overseas, just as it is to but T shirts and trainers. Lets focus on what we are good at (that the other counties cannot do), earn the money from that and buy their cheap cars rather than subsidising overseas operators and complanies to hire a few aussie jobs (when there is a skills shortage).

  • No Name

    Whats happening to Australian car maunfactuering happened here (UK) 30years ago. We diversified subsequently and now manufacture Japanese cars here. The Nissan Dualis (Quashqai here) is built in the UK and exported to Japan and the rest of the world. A japanese manufacturing plant is being set up to produce the Dualis laocally in order to meet demand.
    There will always be a manufacturing base in Australia. Whoever is at the top of Ford/Holden/Mitsubishi can’t be very bright by just soldiering on building cars people don’t want. Why do they only build big cars WHY don’t they build the smaller cars in demand. It smacks of incompetance locally.
    Reading the comments above it seems there is SO much demand for small cars that people will buy just about anything. Holden should definetely have the Euro Corsa on therir fleet.
    Ian – I noticed when I was there that comparably Australian market cars did have less kit, however new prices are nearly the same but say a holden commodore was less than the UK.

  • http://Toyota David

    Problem is both GMH and FORD in Australia are American owned and we all know how concerned American manufacturesrs are with lighter bodied fuel efficent cars.
    Both companies have fostered upon us with each new car more power more weight with no regard for fuel economy.Go into a showroom and ask for a locally produced FORD/GMH diesel car.They are 20 years behind most European and Japanese car makers. Why should the Australian taxpayer prop up an industry that cannot meet what the consumer demands. They either get with it or go the way of the dinosaurs.

  • Dave

    Well for me SIZE MATTERS,
    I Would never buy a tiny hard riding rice burner, I live in the country and I need a big car for the kind of driving and distances I do.
    if you live in the city then you probably dont need a car at all as there is pleanty of public transport.
    Australia is not Europe or Asia give ma a muscle car any day.

  • monaro

    I think we all agree, decrease subsidies untill the car co’s meet consumer demand and are env more responsible.

    end import taxes and LCT, and this will make the Aus Co’s stop ripping people off and charge cars for what they are worth. The car industry in AU the 70 000 people involved in it, are doomed anyway, why should 20 Mil people pay more for cars and suffer because of them? A Fair Go would be nice.. AU is already becoming one of the most expensive places in the world to live in, the big business and the government need to stop conning us and robbing us with unfair prices for goods. Exmple Porshce 911 in USA – $77K in Aus $220… how can this be fair?