With their US parents on the verge of collapse, an automotive industry expert has claimed that Australia’s car assembly industry will simply not survive the economic recession.
Clive Matthew-Wilson, editor of the car buyers’ Dog & Lemon Guide, has suggested that while a US government bailout plan for General Motors will rescue Holden’s parent company in order to protect American jobs, this will come at the cost of our own local industry.
Holden has already halved production at its South Australian plant and Mr Matthew-Wilson believes that this slowdown is the beginning of the end.
“Australia’s car factories are losing money on every vehicle they make. No amount of incentives from the State and Federal governments can solve this basic problem. It’s not a matter of whether they close down, but when they close down.”
Mr Matthew-Wilson believes this will be the fate of not only Holden, but Ford and Toyota in Australia as well, as their parent companies seek to trim unprofitable divisions in order to ride out the recession.
“People falsely believe that Ford is doing okay. That’s not true. American Ford’s sales are down 43 per cent in the first quarter of this year. Ford is losing billions just like GM; it’s just that Ford arranged private sector finance before the recession, so it’s not quite so obvious how serious things are.”
“Australia’s only other manufacturer, Toyota, is globally facing its first annual net loss in 59 years. How long do you think Toyota is going to put up with losing money by assembling cars in Australia?”
His perspective is that the Australian automotive industry is simply not competitive on a global scale, with a glut of new cars at bargain prices emerging from Asia while locally produced models become less relevant to international markets with a push toward smaller, more sustainable vehicles.
“The Australian government can throw $6 billion or $600 billion at these car plants, but they still won’t be economically feasible. The Australian car industry can re-focus on small cars, green cars, blue cars or red cars. None of this will make the slightest difference.”
It is his opinion that the $6 billion Australian car industry bailout plan will simply be paying the bills for a few multinational corporations, while doing nothing to solve the underlying problems and would be better spent by giving it to the affected car workers.
Finally, Mr Matthew-Wilson suggests that to be a successful car manufacturing nation requires a very large local market, a profitable export market or extremely low costs – none of which Australia has.