Australia’s three surviving car makers have called for continued financial support, a reassessment of tariffs and trade agreements, and policy clarity in their submissions to the Federal Government’s inquiry into the current state and the future of automotive manufacturing in Australia.

The Productivity Commission received 60 submissions – including those from Holden, Toyota and Ford – for consideration ahead of the release of an interim report on December 20 and the full review on March 31.

Holden’s submission insists that automotive manufacturing assistance is required in two forms: investment attraction and investment return.

The car maker emphasises the effectiveness of previous government co-investment deals, which have seen Holden and parent company General Motors invest $3 for every $1 of capital assistance provided by the Federal Government.

Holden says the now-defunct Green Car Innovation Fund provided this level of assistance and “was successful in attracting foreign investment”, suggesting a similar level of assistance is required going forward.

holden-development

It is also supportive of the assistance provided by the Automotive Transformation Scheme (ATS) and previously the Automotive Competitive Investment Scheme, which support and encourage production and research and development activities.

“To be globally competitive with other countries which are providing perpetual assistance to their local automotive manufacturing industries, Australian automotive assistance needs to be set at appropriate levels and be ongoing,” Holden’s submission reads.

Holden highlights data showing that 19 of the G20 countries have automotive manufacturing at their core, and says governments of both advanced and developing economies around the world offer car makers assistance and incentives in the form of tariffs, subsidies, tax incentives, non-tariff barriers and financial grants.

It says Australia is now one of the most open automotive markets in the world, claiming an effective tariff of around three per cent after taking free trade agreements (FTAs) into account, compared with 10 per cent in the EU/UK, 25 per cent in China, 100 per cent in India, and 25 per cent for pick-up trucks in the US.

“With Australia’s now negligible automotive tariff, an increasing number of FTAs, a persistently strong Australian dollar which hampers exporting, and an increasingly fragmented domestic new vehicle market, Australian automotive manufacturing has significant challenges and will require adequate levels of ongoing public assistance in order for it to remain globally competitive.”

In March 2012, Holden announced a plan to produce two new cars (later revealed to be next-generation versions of the Commodore and Cruze) in a move that would shore up its local manufacturing operations until 2022, though its future beyond 2016 is once again up in the air as it renegotiates funding with the newly appointed Abbott Government, which is waiting for the findings of the Productivity Commission’s review.

2012 Toyota Camry Atara S

Toyota Australia’s submission lists four key requests of the Federal Government, headed by the call for “a long-term, consistent, globally competitive policy suitable for the Australian context to attract future investment”.

It describes the level of government support for the automotive industry as “modest” compared to other countries, and “reasonable” relative to support of other industries in Australia.

Toyota Australia says that for every dollar of government support it receives, it spends at least $20 in connection with manufacturing in Australia, “primarily in purchasing local parts from suppliers”, and claims to have spent $1.5 billion related to building cars in Australia in 2012.

It says future fair trade agreements “must seek to address deficiencies in existing FTAs where possible and ensure similar inequalities do not arise”, insists non-tariff barriers in FTA partner countries “must be addressed”, and contends that a renewed focus on progressing the Australia-Gulf Cooperation Council FTA would support its exports.

toyota-production

Toyota also believes the automotive industry should no longer be excluded from the processes available to other importers to seek tariff concessions for components that can be proven to not be available in Australia.

It further suggests changes to industrial relations framework should be contemplated to “require industrial laws to be based at least to some degree upon productivity and flexibility gains and to set a more reasonable threshold for the definition of ‘significant harm’ in the context of preventing damaging industrial action”.

Toyota Australia is in the early stages of its company-wide transformation, in which it aims to reduce the cost of building cars by $3800 per unit by 2018 through cost reduction strategies, flexibility and process improvements, and accelerating supplier capability development activities.

Toyota Australia is poised to make a decision on whether to close its local manufacturing operations in the first half of 2014, with its future hinging on its success in securing production of the next-generation Camry, due in 2015.

ford-ranger

Despite announcing plans to cease vehicle production in 2016, Ford Australia submitted a number of recommendations for consideration by the Productivity Commission as it looks to its future as a design and engineering hub for its US-based parent company.

Like Holden and Toyota, Ford’s key recommendations focus on the ATS – which it says should continue until 2020 with no reduction in Step 2 funding and with modifications to facilitate ongoing investment into automotive research and development – and the development of a comprehensive and fair trade strategy.

Ford says it is the largest automotive research and development investor in Australia, investing more than $200 million last year for a total investment of $1.9 billion over the past six years.

It says its successful delivery of the Ford Ranger design and engineering program enabled it to win additional product development work.

“These programs include a new Ford Ranger derivative, a significant Ford Ranger model upgrade and numerous other projects for regional and global markets in the next few years,” Ford’s submission reads.

“Ford Australia sees a significant and ongoing role for its product development function as a design and development Centre of Excellence for global vehicle programs given the right policy settings.”

The Productivity Commission conducted public hearings of the submissions in Adelaide on Monday and in Melbourne today.




  • Wtf!

    I really hope it’s not too late. I want to keep car manufacturing in Australia.

    • Sumpguard

      So do I . If people understood how much government subsidies go into other sectors such as mining (which also runs at a loss at times) they may be a little more sympathetic to this industry

      I agree it cannot keep operating the way it is and will require their parent company to allow them to manufacture vehicles for global consumption that aren’t made elsewhere. Wishful thinking perhaps but personally I think it will be a sad day if they all shut shop.

      • barry

        And so do i.Every nation protects there local industry in some way.We have a co -investment of 3-1.How about dropping that and just give our blokes a fair go with genuine FTA agreements.
        What does seem strange is that our major Asain trading partners deserve a fair go in Australia.But cars out side Asia should be subject to larger tarrifs.

      • lti

        Doesn’t your recent car buying history consist of various Korean manufactured cars?

        • Sumpguard

          Absolutely, but my partner’s car is a new Australian built one. We also kept her other car so our guests and daughter can use it when they fly up .I do however know better than to disclose what they may be in here and feed the pack wolves.

          My car is an SUV (no it’s not a KIA which was a fantastic vehicle) and it best suits my needs for my job. I cover large distances from Karumba in the Gulf of Carpentaria to the tip of Cape York and south to Mackay. I drove the territory diesel and didn’t like the interior. The ride was fantastic and that engineering is one thing we will lose in 2016. My choice was much better value than the territory in the end and a brilliant long distance vehicle on sealed and unsealed roads.

          Like others here I would buy a local car if it suited my needs. Currently none of them do. Both the commodore and falcon are brilliant value but not practical for me. My partner’s car was great value and for what it is used for it is very practical.

          Personally and it is just my opinion but I think holden would probably do best to build a torana sized rear driver for global markets that can accommodate 4,6 and 8 cylinder engines. But their parent company may well be the handbrake. I’d certainly consider such a vehicle. An Aussie BMW 3 series competitor sounds great to me. The commodore and falcon are one size too big for today’s market.

          I just don’t believe many who are calling for them to be culled have a full understanding of the support others industries get yet they aren’t in here asking for those industries to be shut down. The money that flows back into the economy from the auto industry offsets so much of the outlay from government.

          Who here suspected we’d see such a massive growth in SUV sales in a few short years. Even many manufacturers didn’t and are only jumping on board now. So it’s easy to sit in a chair at your PC’s and kick these guys in the guts for failing to adapt but hindsight is a wonderful thing.

          • Sydlocal

            Exactly. Sometimes the local offerings don’t suit your requirements.
            If the Government/s were REALLY serious they should mandate that ALL government departments (local/state and federal) should in the first instance choose Australian manufactured cars for their fleets. If there isn’t anything suitable (like when a 4WD ute for example is required) then, and ONLY then, are they allowed to purchase a vehicle not built locally.

          • jety

            But why on earth would you want to support particular manufacturing if the product for your requirements isn’t being manufactured. It’s a complete waste.

            Government fleets do have Australian made policies. The cars just often don’t suit the requirements – value is where they usually fail.

          • Rod

            Remember though the Territory is quite old now, its been around for so long, it has out lasted several Korean SUV that have come and gone. Yet it still is the better car to drive, can tow far heavier loads and personally I would not buy a korean built SUV, not for any price. And I just don’t like the styling of them and its only in the last 1 to 2 years the korean SUV has caught up in the styling. Maybe the interior is a bit more flashy but I would trade that for a better engineered car. If Australians were willing to spend a little more and buy the locally made product then you would see more updated models being made here. We are paid more than those people in other countries yet you want to purchase cheaper imported cars. Thats why they should tax those cars.

          • 2BFrank

            The Territory is a quiet achiever , arguably one of the best Australian cars ever built.

          • jwrj

            The Territory is not a well engineered car. It may drive well but is poorly built. I know three people who’ve owned one and all got rid of them after a few years due to a barrage of faults.
            Amongst a variety of electrical issues, trim problems, fluid leaks, probably the most amazing was that two of the three examples were RUSTING! Rusting at just two years old – and this is not a rare event, try googling it, heaps of owners are reporting it.

            Also the fuel economy was poor, around 16-20L100km around Sydney suburbs – and economy is a issue that I’ve seen mentioned many a time in a Territory review.

            All three were sold off (presumably the 3rd one started rusting too). Two were replaced with a Hyundai, one with a BMW (incidentally one of the Hyundais – a IX35 has also been riddled with faults though the other I-Max has been faultless) but I have never, ever seen a car start rusting at even 10 years old let alone 2 years old.

  • j53

    They’d have my financial support if they would make a car that I’d actually want to buy.

    • matt

      and what exactly is that?

    • guest

      But if they build the car you want to buy, I won’t support them because they are not making the car I want to buy.

      Financial assistance and appropriate tariffs (like some other countries use) would be quite good. Just to keep free trade equality.

    • Shak

      What would you like them to make? Last i checked we still made wagons, sedans, hatchbacks, limos, hybrids, diesels, SUV’s, mid sized family sedans, utes, performance cars and even flex fuel capable cars.

      • ha6

        Not one is decent quality and most of those categories you’ve mentioned don’t cross mix. Where is the diesel station wagon? Where is the Diesel ute? Where is the hybrid hatch? Where is the mid sized family wagon? Where is the performance hatch?
        There also seems to be a excess of plurals. SUVs? Territory+what? Mid sedans? Camry+what? Hybrids Camry+what? Hatchbacks? Cruze+what? Limos? Caprice+what?

        • Shak

          Every combination you mentioned is a niche product at best, and very few places make them. To expect a country as small as ours in terms of population is just silly. We make some top notch cars here. Yes, they dont have the best quality in their respective classes (VF excluded), but for the price they’re damned good.

          • jwy

            Haha. Diesel ute is a niche product? Go have a look at how many utes are selling – they’re nearly all diesel. I’ll tell you whats niche – a ute based on a family car with barely anymore payload capacity than a family sedan and only a thirsty petrol engine. The Commodore/Falcon ute would be getting outsold by imported diesel utes by something like 10 to 1.
            Lots of places make hot hatches and wagons and VW’s GTis alone pretty much match Falcon sales in Australia when supply allows.
            Hybrid hatches sell more than Hybrid sedans in Australia. Prius easily outsells Camry hybrid.
            Wagons and Hybrid sales may be flat here but small+mid sized SUVs, hatches and diesel ute sales are booming. Plus wagons (EU) sell well overseas as do Hybrids (USA/Japan). The category that we’re in – big sedans is declining (and overseas it’s dead)- yet that’s what we’re mainly concentrating on? A declining segment? And you’re wondering why people are buying imports?

            If our cars were “dammed good”, the size of our country wouldn’t matter as we’d be able to export large numbers overseas and people would buy them. But the cars are not good and people overseas would not buy them. Even Australians are shying away from them.

  • Aero

    I wish them the best of luck. Would be an absolute shame if Holden were to shut down. As far as I’m concerned, Holden makes bloody good ‘modern muscle’ cars and are unique in each and every sense of the word.

    • barry

      To true.Holden taught importers some lessons in reliability and durability in Australian conditions.Remember that legendary 186 engine,138,149,161,173,202 all bullet proof.

      • jary

        bahahaha. Most people have moved onto imports because the Australian made cars weren’t reliable. You’ve got it the wrong way around.

        It was certain Japanese and certain European brands that taught reliability.

        Also, there is no such thing as “Australian conditions” for cars. Our conditions are no different from many other parts of the world. In fact most conditions here are milder and in the harsh areas such as in the outback, no one uses Australian cars, they all use imported Landcruisers/Hiluxs etc.

        If anyone remembers those engines, it’ll be for the wrong reasons. Besides, if they were so good, you wouldn’t need to remind people to remember them because the engines would still be in use if they were “bullet proof” – but they’re not and they’ve all in the scrap yard now.

        • dave

          Reliability would not be the issue. I mean for one thing Cab drivers will only drive falcons as they can’t afford the down time with the car in the workshop. Do you see cabs broken down all over the place? I think styling could be the reason, there is no small car apart from Cruz and I don’t like the look my self and no dual cab 4×4 utes which is a big market here.

          My experience, the only car I have even had to take back to the dealer for warranty work was the first and last imported car I bought. So sick of that car (a Mazda by the way) that I sold it to a car broker to get rid of it quick. Dealer service was terrible and unprofessional. Back in a falcon now, smooth quite acceleration, comfortable and quite, no hassles.

          • jsj

            Actually I do see Falcon cabs broken down fairly often. I also ride in them fairly often and regularly hear them spluttering on start up, making whining noises and strange clunks + the trip computer showing economy at around 20L100km. Then you open the boot to try put a suitcase in and find the boot space is worse than many much smaller sedans.
            Also, have you ever looked at the tarmac under a busy taxi rank? You’ll find it absolutely covered in oil from all the cabs leaking oil.

            The Cab companies buy Falcons cause they’re big and very, very cheap to buy from the ex fleet sales and they can run them on LPG.
            However you’ll find many parts of Australia have moved away from Falcon cabs. I saw plenty of Prius and Passat cabs last time I was in QLD.

  • Hamster

    So ford want in on the money so they can draw cars??? Hmmm

    • fred09

      But they designed the trim (some of it anyway) on a Mazda !

      You have to admire their front.

  • Shak

    “With Australia’s now negligible automotive tariff, an increasing number of FTAs, a persistently strong Australian dollar which hampers exporting, and an increasingly fragmented domestic new vehicle market, Australian automotive manufacturing has significant challenges and will require adequate levels of ongoing public assistance in order for it to remain globally competitive.”

    This paragraph here perfectly sums up what had lead us to where we are today. Subsequent Governments have done little to provide any real solutions to these problems and that is why car manufacturing is in its current state. Not because of some outdated notion that we dont build cars that aussies want to drive anymore. There is no need to bring full blown protection back, but Governments across the country need to ensure that they are actually putting in place measures to make doing business here easier, however unlikely that is to happen.

    • KaleSplit

      Remove restrictions on imports. Subsides car sales, not car manufacture. If Commodore hit the market at $20K they could not make enough of them, they would walk out the door. So, if you want local manufacture make the sale price competitive. At some point they will get the scale and eliminate the need for financial assistance.

      I would rather give them a $10K bonus for every car sold as opposed a $10K bonus for every car made. Think about it.

    • Phil

      problem is, govt has little influence over the outcome. Monetary policy is handled by the reserve bank, fiscal policy by govt. Without a change in monetary policy ie more active intervention in the exchange rate you can kiss goodbye to manufacturing. But that isn’t the reserve’s priority, balance of payments is. As long as the money leaving the country equals the money coming in, they’ve done their job regardless of how it occurred.

      Fiscal policy is limited by the govt’s ability to raise revenue through taxation. In order to fund subsidies they have to apply more taxes. Tax revenue is being hit by the high dollar – healthy exports generate jobs in Australia and profits from sales outside Australia, which are taxed in Australia. It makes me wonder why there has not been more pressure from govt on the reserve to intervene in the rate, given a healthy local economy provides the tax revenue to implement policy.

      • Shak

        I wouldn’t necessarily target monetary policy as what needs to be fixed. In fact it’s only because the RBA does such a good job that we are in the economic position we are today. I was trying to touch more on the fact that our government has does nothing to target other country which have found sneaky ways around our FTA’s, also that they do almost nothing to help the manufacturers set up and seek out new export markets.

        Now i understand that head office pressure from Detroit is what is mostly blocking a larger export push for Holden but the government needs to toughen up. If they just stick to this co-investment model and keep giving the manufacturers money then i dont see a way out of this problem. They need to help make the market more competitive for them, and also help them to become more globalised. IF GM doesn’t like that well then they can sod off.

  • For the Rd

    I work for an Automotive Supplier. No one likes to hear this but it’s pretty much over boys and girls. The numbers are too small to sustain us, the suppliers, which are going down and folding one by one. Once we become rarer, there is no point of keeping local production. We are talking a major increase in number in order to supply the local production, it’s not going to happen. I give it 24 months max. Its not the fault of the government and neither the consumers, everyone has the right to choose. If anything it is the fault of Aus being a small population country and too expensive (well that one is thanks to the government actually) and manufacturers for making inferior and expensive cars for many years (they caught up now but a little too late). Its in human nature to be different and just like people get wowed by a SS in the US when its just a taxi here, we get wowed by a MB or BMW when its a taxi in Germany. People wanna be different. Way of life.

  • Nofears

    I understand the outlook of those making the decisions only too well.
    Some here say we are unique as if it is a badge of pride but the reality is it is death. The beloved Ford l6 is a perfect example,subsidised or not it will be gone. Low volume,RHD products in a LHD V6 world that is only interested in Global products that can be high volume have no place. The post GFC world is different & in response Ford & GM will preserve themselves at home before considering our welfare. The Ford & Holden fans won’t like it but only one manufacturer is taking a logical path.
    It is not a unique product, it is made the world over as well as here & don’t even make a wagon variant. I think if Holden is to survive in any form at all in exchange for subsidies it will have some conditions attached. Possibly no more expensive local development of a niche product, interchangeable parts with Global models for local assembly only or leave our shores for good. It wouldn’t be what we are used to but I think we will need to adjust.

    • For the Rd

      Thats not even worth it. Its way cheaper to make the whole car in Thailand and import it to Aus. Our labour is way too expensive. Thats why Daimler sold Chrysler yrs ago. Similar case. We are in a country where a line worker gets paid more (in fact significantly more) than most of the engineers. No chance!!

    • Andy Whitby

      The VF introduced commonality with other GM products. The electrics, seats, sensors, door grabs, shift lever, MyLink and instrument cluster are just a few things that pop to mind.

      However, Holden have to source these from a common factory in the GM Empire, then get torn shreds off them for not buying local. They just can’t win…

      • Chad

        Maybe Holden cars should come in a flat pack made overseas but assembled in Australia just like IKEA .

  • Dave W

    Lol @ Holden wanting the govt to finance 25% of their operation. GTFO!!

  • Puzzled

    Has anyone suggested mirror tariffs? If another country has zero tariffs, we give them a zero tariff for their product. A country with 40% tariffs, gets a 40% tariff. Levels the playing field for tariffs. Car parts and assembled vehicles already have a country of origin trace system, so its not hard to implement.

    It doesn’t remove the differing cost of labour problem, so Australia would still struggle to compete in the cheap and cheerful range, but people buying volkswagen’s, subaru’s and mazda’s (most of whom used to buy local) are not aspiring to the cut price vehicles. Australia need to assemble quality vehicles of the right size and features to keep up with its own population’s aspirations.