Australian Car Manufacturers Scared of Imports

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.
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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!