HOLDEN has announced it will offer voluntary redundancies for 500 factory and enginee

[Straya!]

If cheap and dangerous cars like great walls weren't being imported without making safety requirements this kind of thing could be prevented.

 

[Linzi]

Toyota will survive. The camry sells well in the middle east and sales remain ok here. (BTW Altona is about to be featured on a national geographic channel 'megafactories' episode) What we need is for Ford (who owns a big chunk of mazda) to switch over to build the cars that actually sell for it in Australia here - i.e. fiesta and focus. Both very good cars. Alternatively switch over Broadmeadows to making Mazda 3/6/Bravo, all very popular models. Holden could built its very palatable Opel line-up here. They build these cars in europe with their higher wages and even higher regulation, right? (EU is very protected market, though) But at the end of they day we simply cannot build a car here for the same price as it can be built in sth africa, thailand, mexico or indonesia. Its all those free trade agreements. My understanding is we get to sell our iron and coal to Asia and it comes back as Nissan Pulsars, all tariff free.

I'm no expert.. But I would say by the time they switched their factory over to build all these top selling cars, and then having to pay our workers a lot more than those of where those cars were originally manufactured, the amount of profit that would actually be made from the now locally built cars would not come anywhere near close to breaking even let alone making a profit, making it simply not viable to do.. Changing a factory/ manufacturing process would cost A LOT, take a fair bit of time and not to mention all the administration kind of costs that would be involved, and it would probably need to be a completely new model just to keep up with the times. For example if you set up a factory for an already 1/2 year old car, it will be out of date by the time they actually start rolling of the assembly line. And at the end of the day, probably more than 50% of the parts would be imported anyway, so its not really helping us as much as you'd think..

Just my view on it anyway..

 

[c2105026]

Fair enough....but there is one thing in question - oil. Or the price of it.

When the VE was signed off ~2002, oil was $20/ barrel. It was $70/barrel when it was released. Additionally the FG Falcon would have been signed off maybe in 2004 (when oil was $35 a barrel); released in '08 oil was over $100 a barrel!
Even though petrol does not make up much of a car's running cost (if you are buying brand new with finance), people make a big whoo-ha of petrol prices.
People buy cars now that are perceived to be cheaper to run; they go buy small SUVs that guzzle just as bad as a commodore!

 

[monkeys437]

Toyota will survive. The camry sells well in the middle east and sales remain ok here. (BTW Altona is about to be featured on a national geographic channel 'megafactories' episode) What we need is for Ford (who owns a big chunk of mazda) to switch over to build the cars that actually sell for it in Australia here - i.e. fiesta and focus. Both very good cars. Alternatively switch over Broadmeadows to making Mazda 3/6/Bravo, all very popular models. Holden could built its very palatable Opel line-up here. They build these cars in europe with their higher wages and even higher regulation, right? (EU is very protected market, though) But at the end of they day we simply cannot build a car here for the same price as it can be built in sth africa, thailand, mexico or indonesia. Its all those free trade agreements. My understanding is we get to sell our iron and coal to Asia and it comes back as Nissan Pulsars, all tariff free.

In the articles I read elsewhere and the comments in the original post, Holden claim the job losses are from reduced demand for the holden cruze. I don't believe small car demand is all its cranked up to be, and where they sell in volumes it's due to low prices which Aussie manufacturing could not match. The large car sales are still there, they've just been diluted with the expansion of Dual Cab utes and Soccer Mum SUV's which have saturated the family car market to such a point where 2000 units per month is considered a strong seller.

No matter what Holden or Ford build our domestic volumes will be small enough to make it very tough to do business

 

[Reaper]

Longish but goes a long way to summarising why Australian made cars are behind the 8 ball. It puts govco subsidies into context and may open your eyes into how lop sided international trade is, even with our FTA partners. In short, Australia is being ####ed over (click on the link - may be easier to read):

http://www.fapm.com.au/Portals/0/eNewsletter/MDW speech to dinner 191012 - MDW.pdf

FAPM NATIONAL DINNER – Melbourne Cricket Ground
Mr Mark De Wit, FAPM National Vice President
FRIDAY 19 October 2012
The Honourable Brendan O’Connor, Minister for Small Business, distinguished guests, ladies
and gentlemen, good evening and welcome to the FAPM’s Annual Dinner. Firstly I'd just like
to publically acknowledge the power of work that Jim Griffin does on behalf of the industry
and wish him well in his recovery.
Unfortunately for all of you, I drew the short straw to make this address. Thanks to Richard
for writing a terrific speech and I apologise for not using it and going with my less politically
correct version instead.
The automotive industry is often referred to as the “foundation” of manufacturing, leading
the sector in research, industrial design & styling, engineering & product development,
testing & validation, tooling & manufacture, lean production, logistics & supply chain
management.....the list goes on.
But it is under severe threat. Its survival is far from certain.
And I want to touch on why we think this is the case
Let's start by having a look at the Playing Field:
 In the last few years, about 1 million vehicles per year have been sold in Australia.
 In 2011, Australia only produced 14% of all 1 million vehicles sold in this country.
 5 years ago, this was ~20%, 10 years ago was ~30% and 20 years ago this was ~53%?
 So what has changed……. I heard some self proclaimed experts on the radio saying we
are not making the right cars that people want.
 RUBBISH….in fact of the 5 platforms built in Australia (Commodore, Cruze, Falcon,
Territory and Camry), in 2011, 4 were in the top 10 selling cars.
 If you add up the volume of the top 10 selling cars in 2011 it equates to only 295,212
vehicles. So even if we build every one of these top 10 in Australia, we would still only
be at 29% domestically produced as a ratio to total sales.
 So we produce a meagre 14% of all vehicles sold here, but if we include all export
production as well, we made ~220,000 cars in total (140k domestically produced & sold
+ 80k for export) - so Australian total production to total sales ratio of 22%.
 Of the 1 million cars sold here, 86% are imported, with almost all ( 95%) coming from
just 4 countries. Japan accounts for 44%, Thailand 21%, Korea 20% and Germany 10%.
 Let's compare our 22% production to sales ratio to these 4 countries.
 In Japan, sales of 4.4m vehicles versus production of 8.4m vehicles (190%)
 In Thailand, sales of 800,000 vehicles versus production of 1.5m vehicles (188%)
 In South Korea, sales of 1.5m vehicles versus production of 4.7m vehicles (318%)
 In Germany, sales of 3.2m vehicles versus production of 5.9m vehicles (185%)
 So why are we at 22%? Why has it come down from 53% 20 years ago? What do we
have to do to get it right like these 4 countries - and many others as well - from my
2 | P a g e
research, almost every other car making country has a ratio > 50% and the majority are
in triple digits
Let's look at the dreaded ‘ T’ word....Tariff's
 For any imported car into Australia, the inbound tariff applied is 5%, unless of course we
have a free trade agreement with that country (which we do with Thailand and the USA,
and next year, Malaysia), where the tariff becomes zero.
But unfortunately this isn't reciprocated in return.
 If Australia tries to send a car to Japan, there is a 10% tariff + a 5% consumer tax +
technical roadblocks that make it virtually impossible to get regulatory approval to get a
foreign car on their road.
 If we send a car from Australia to Germany, there is a 10% tariff + a 19% VAT (which isn't
applied to EU built cars), a total of 29% versus the 5% for a German car sent here!
 If we send a car from Australia to Korea, there is a 10% tariff applied + there is a long
and painful process to try and get it registered + an unwritten rule that anyone buying
an imported car in Korea will likely be subjected to a tax audit
 And finally, when free trade isn't free…..Thailand send 180,000 vehicles a year into
Australia (and growing) with ZERO tariff. Logically, with a free trade agreement, we
should be able to send cars from Australia back to Thailand with a ZERO tariff……and we
can…..BUT there is a 'duty' to be paid dependent on engine size. In essence it means
that if we try and send an Aussie made car to Thailand, the 'duty' applied is anything
from 50% to 80%
 The exception that appears lower is the USA, who have a 2.5% import tariff on
passenger cars…….however, what many people don't realise is that the local producers
in the USA make a very large number of "pick-up trucks" (like the F150 Ford, Chevy
Suburban, Toyota Tacoma etc), and in fact the majority of profit for the North American
producers comes from these types of vehicles……and if you want to import a pick-up
truck into the USA, it attracts a 25% import tariff !! They protect their Golden Goose !!
 When our production to sales ratio 20 years ago was at 53%, tariff rates for imported
cars into Australia were a high ~32% (down from their peak of 57.5% in the mid 80's)
and they have been rapidly reducing ever since under the 'Button Plan'.
 More recently, they were reduced in 2005 to 10% and then again in January 2010 to 5%
(effective 3.5%)
 Since the Button plan in the late 80's was devised and Australia set a path to reduce
tariffs to zero, we have also seen the emergence of low cost countries as Auto
producers. It is interesting to compare the import tariff should we try and send a car
into one of these so called emerging countries……India 60% tariff + duty of up to a
further 50%; Russia 48%; Brazil 35%, Malaysia 30%; China 43% (25% + 18% VAT). These
countries are all now importing cars to Australia (at 5% or some at Zero).
 I find it interesting that the likes of China, who are now the largest Auto producing
nation in the World (18 million cars/trucks produced per year and growing), with the
World's second largest economy, is seen as an 'emerging' player in Automotive and can
therefore justify 25% Tariffs + 18% VAT for imported cars.
3 | P a g e
So what about co-investments or 'hand-outs' our Government gives the Auto sector as some
press label it?
 The annual investment from our Government into the Australian Auto sector hovers
around $500 - $600 million per annum. With 23 million people in Australia, that equates
to between $18 - 25 per person per year of tax payer money to help attract investment
into future Auto production here.
 This economic support requires the sector to more than match these investments, so it’s
certainly not all one way, hence the term co-investment.
What surprises many is that this is extremely low versus the rest of the Auto making world.
 In Germany the amount is $95 per person per annum;
 in the USA it is $260 per person per annum;
 France is $150 per person per annum……and the list goes on
It is a fact that Australia not only has the lowest effective Tariff rates in the Auto making
world but it also has the lowest Government co-investment per capita.
Now combine these two factors above with an Australian dollar that historically averages
$0.72 to the USD and is now 40 - 45% higher, making imports 40% more competitive and
exports 40% less competitive) and it is pretty obvious why Australian produced vehicle
volumes are in decline.
The net effect is that we have the most open Auto market in the world
 Did you know that more vehicle brands and models are on sale in Australia than any
other country in the world (~64 brands at last count, with over 240 model variants to
choose from)?
 By comparison in the USA, where they sell about 14 million cars/trucks per year (versus
our 1 million), there are only 33 brands on sale! That is 14 times the amount of sales but
only half the number of brands!
 20 Years ago in Australia there were 48 brands and only 97 model variants to choose
from.
So there's the Playing Field at present - far from level globally!
4 | P a g e
I put it to you that simply more of the same approach will yield the same trend we have
been seeing for the last 20 years.
Things need to change - but what things?
So, should we just raise Tariff's?
 Well, my view is that, with the exception of cutting some slack for genuinely emerging
countries, in a very small manufacturing market like Australia, tariffs should at least be
reciprocated .That is, I have no problem scaling down to zero - as long as everyone else
is doing the same. But clearly they are not. With the onset of the GFC, many nations
chose to freeze their tariff positions, and in fact some (like Brazil), actually raised them
to offset the effect of their high currency. Reciprocity (except for genuine emerging
countries) - you can't get fairer than that. If it is 10% + 19% VAT for us to get an Aussie
car into Germany, then we should have the same for German cars to Australia……Engine
levy’s of 50 – 80% on Thailand cars; 25 + 18% = 43% for Chinese cars; 10% for Japanese
cars etc.
 Let's have FTA's – not Free Trade Agreements BUT Fair Trade Agreements!
 One politician argued with me that this just raises the price of cars for Australians
 NO it doesn't - if you buy an Aussie made car …… and that is the point !
 YES it does - if you buy an imported car. However, a 5% increase in Tariff on a
$35k car is a $1750 increase…….and this pales into insignificance when
compared to the savings that we should be getting from the Aussie dollar
appreciating 40% in the last 5 years!
 If we then continue to buy 850,000 imported cars, an average 5% increase in
Tariff (back to a 10% average like most other mature Auto making countries) on
an average $35,000 car, would raise Government revenue by ~$1.2 billion -
which I'm sure we can all think of some good ways to spend......like improving
the co-investment in Automotive to competitive levels.
As right and fair as I think reciprocity is, the likelihood of Governments altering the tariff
path is slim......
5 | P a g e
So what else can be done?
 Well, here are 3 things.....
 1) Government fleets
 Did you know the Federal, State and Local Governments + fully funded
Government bodies purchased 60,000 vehicles in 2011 with taxpayer monies
(down from ~100,000 in 2004 as we've tighten recent spending)
 Of these 60,000 vehicles, only 19,772 were Australian made!
 In analysing the data further, Federal Government procured about 44% local
vehicles; The Vic and SA State Governments do a reasonable job (at ~70%). NSW,
QLD and WA are poor at 32%, 20% and 17% respectively. Local Councils take the
(poor) cake at 16%.
 An economist tried to tell me it was because Australian cars are too expensive or
did not meet the Green requirements
 Well, it costs no more to purchase a Holden Cruze than a Hyundai i30 or a
Mazda 3……or to purchase a Falcon EcoLPi or Toyota Camry or Holden
Commordore than a Honda Accord or a Hyundai Sonata……so it is not price.
 And local products are now just as 'Green' as any imported car - we now make
LPG Falcons and Commodores, diesel Cruze and Territory, Hybrid Camry, 4
cylinder Falcon…..there is NO 'Green' excuse not to buy Australian for
Government fleets.
 Now, there are some special purpose vehicles that we don't make here - for
example, the Police in the Northern Territory need full 4WD capable vehicles -
but let me be generous and say these special purpose cars may make up 25% of
the 60,000 total procured……so ~45,000 vehicles (minimum) of the annual
60,000 purchased should be local made products.
 At 220,000 vehicles produced here, an increase in Government fleet purchase
from ~20,000 cars to 45,000 cars (25,000 improvements) is an 11%
improvement to our Australian production total………our industry would kill for
that!
 And an 11% improvement in volume should create thousands of jobs!
 2) Safety
 Did you know that of the 1 million vehicles sold here in 2011, ~30% (that's
approximately ~300,000 for the mathematicians in the room) did not meet the 5-
Star ANCAP safety rating?
 Every Australian made car meets the 5-Star ANCAP safety rating.
 The cost of all road accidents in Australia is estimated (by the department of
infrastructure) at $18 billion/year
 So, why don't we put a penalty on new cars that don't meet 5 Star - say $2500
for each star below 5…..so a 3-Star vehicle would attract a $5000 levy.
 This would discourage purchases of less safe vehicles.
 And just a 5% improvement in the accident costs (through prevention and/or
minimising injury) would mean almost $1 billion per year would be saved, not to
mention the revenue generated from the levy.
6 | P a g e
 It would also have the potential effect of shrinking the number of brands and
model variants - with people moving to safer (and perhaps local) models.
 And finally 3) Gaseous Fuels
 Australia is a net importer of Petrol / Oil.
 Despite our very high dollar, making importing cheaper, Petrol this morning rose
to ~$1.64 per litre
 Many experts are projecting by 2020, petrol in Australia will be around $6/litre.
 Now, did you know that Australia is sitting on the 12th largest natural gas
reserve in the world?
 And if we converted every car to run on compressed natural gas (CNG) in
Australia, with our projected population growth, we would have enough of our
own current known reserves to last 90 years!
 The current equivalent per litre cost is between 19 - 26 cents!
 Compared to a Petrol engine, CNG delivers 40% less CO2, 80% less CO and 90%
less NO.
 It leads to lower maintenance, is quieter and safer
 In 1996, there were 1 million CNG cars in the world. In 2011 there are 14.8
million......so the global market is growing.
 Now, CNG is not LPG……LPG is derived from Oil and is liquefied (hence the 'L').
CNG is compressed natural gas and its only downside is that it takes up more
space than Petrol or LPG.
 Many buses in Sydney already use CNG. Cars and Taxi's in India, Brazil,
Argentina, China, Iran etc are using CNG. Trains in the Napa Valley in the USA.
 But we can't just flick a switch and move to CNG.
 So, my view is we need to get people in Australia used to using gaseous
fuels….the technology has come a very long way - in fact the Falcon LPG vehicle
is more powerful than its Petrol brother and I would defy anyone to pick the
difference in smoothness or refinement - it also costs less to run than many
small 4 cylinder cars……so let's have Government offer huge incentives for
gaseous fuel cars. It can be justified under the banner of 'Green', as even LPG is
far cleaner than Petrol.
 I think the incentive should be twofold (1) a large rebate, say $5000 from
Government for dedicated factory fit Gaseous fuel vehicles and (2) they be FBT
exempt……the net effect of these two things would provide a very large shift
toward Gaseous Fuel vehicles.
 Now here's the good bit for Australian industry……the only vehicles in the 64
brands and 240 models currently sold in Australia that are dedicated factory fit
Gaseous fuel are the LPG Falcon and the LPG Commodore…..Aussie made, so we
get more production volume, create more jobs, and we get a greener outcome
with 5 Stars.
 The relatively minor cost impost to Government could be covered by the
revenue generated by the safety levy and/or a tariffs initiative
 We then need to shift future Government research funds toward CNG
technology. Given our natural reserves, why not become a global leader in CNG
technology and a niche global export producer of CNG vehicles - the export
markets would be large.
7 | P a g e
 In my view we have to build industries and business not just around the skills
and passion of the people, but around strategic benefits we have as a Country -
and we are sitting on one in CNG.

 

[Krilnik]

People buying vehicles produced overseas then they complain about losing their jobs.

Facepalm.

 

[Tsunamix]

1. Push / accelerate / mandate the availability of E85 in Australia. Limit the taxes appliad to E85 to half of that on E10 fuels

Result: Support of local Ethanol producing industrusties.
Increased uptake of Flexfuel engines - which are primarily australian made for the local fuel requirements
Better greenhouse and pollution figures
Reduction in reliance on overseas manufactured engines as E85 is only big in South America at the moment.
Reduction in indirect taxation on the public, because revenues from fuel excise would decrease. Consequently government revenues would reduce and taxation burden on the public would increase.

2. Protect local manufacturers of vehicles, either by tariff or taxation.

result - Overseas models become less affordable, less manufacturers would market here.
Also potentially local manufacturers become less 'lean and mean' in the manufacturing methods simply because they are protected and don't need to complete globally. Mind you - most manufacturers want to complete globally.
Also revenue from duteies / levies would increase, but only until foreign manufacturers stoppedinporting into australia.


3. Protectlocal manufacturers by a instruction to government bodies to buy australian first.

result - if implemented right now, this would increase the costs of government departments to run, which would increase budget expenditure, which would increase the taxation burden on the public.

Choose your poison.

 

[VR38]

What you have to think about as well is people complain of the cost of labour here but in third world countries, where some of the components are manufactured the poor bastards are working for a bowl of rice so buying imports not only hurts out employment industry it also enforces the "slave labour" of the manufactures overseas.

 

[Calaber]

With regards to the decline in Commodore sales, I think it's simplistic to blame the high value of our dollar against foreign currencies as the only major contributor. I believe the following factors have had a significant impact on sales in recent times.

1. The VE is now an old design and is showing its age, particularly in relation to the interior, which has dated badly and was never particularly attractive, nor used quality trim. The VE II facelift was so minor it was a waste of time. People have tired of the design and those who might have normally bought Commodores have looked elsewhere because of the wider range of alternative vehicles of much more contemporary design.

2. Because of its US release being timed to coincide with their motor racing season, the VF has been shown months in advance and many people who might have bought a VE have decided to hold off for the new model. The interior of the VF particularly looks streets ahead of the cheap and nasty VE interior. I suspect Holden is also running down production numbers of VE's to avoid having huge unsold fleets of the old model once VF lands. It is certainly unusual for Holden to reveal so much detail about a new model so many months in advance and I reckon this has hurt VE sales badly.

3. Holden (and Ford) are building the wrong cars for today anyway. Australians have shown a strong preference for SUV's, light trucks (Toyota particularly) or small sedans. Large sedans are out. It's pretty hard to survive when your mainstay body styles are the designs that people no longer want. The VF will probably enjoy a bounce in sales for a while but it is still the wrong car for today's Australian mainstream private buyer. Let's be clear here - it's not that buyers don't want to buy Holdens or Fords; it's that they don't want to buy large sedans. They are after the flexibility and versatility of the SUV type vehicle if they need a larger car, or the economy of a smaller car.

4. There is still the perception that Australian-made means lower quality than imported. Perhaps it does, but whatever the case, the perception hurts sales and the huge number of makes and models on our market provides the buyer with an enormous choice compared to twenty years ago. Brands that were once seen as jokes such as Hyundai are now accepted as quality, well designed products that buyers want for reasons other than cheap, drive-away prices.

5. Economies of scale. Holden and Ford were producing, at best, just under 100,000 cars per year at their height in the mid 70's. As the numbers have dropped, the economies of scale diminished to the point where they are now at or below break-even point. Ford has admitted that the Falcon is doomed and the Commodore as we know it will follow shortly after, despite the fact that both cars are easily the best they have ever been and are equal to or better than many foreign vehicles in many aspects.

 

[mpower]

While large sedans are not as big a part of the general publics buying now they are still a fairly large sector.

Holden have built a small car pretty much forever, they used to import a global car like an Opel or a Daewoo now they build the Cruze here which is the number 4 best seller.

Commodore is still the best seller in it's segment year to date despite a new model looming.

Small cars: March 2013 sales overview | CarAdvice

Top 10 Best-selling Small cars – March 2013

Mazda 3 – 3786 (-0.8 per cent)
Toyota Corolla – 3512 (+12.6 per cent)
Hyundai i30 – 2595 (+15.3 per cent)
Holden Cruze – 2335 (-18.9 per cent)
Nissan Pulsar – 1644 (not listed)
Ford Focus – 1557 (0.0 per cent)
Honda Civic – 1393 (+47.1 per cent)
Subaru Impreza – 987 (-1.5 per cent)
Hyundai Elantra – 874 (+21.7 per cent)
Volkswagen Golf – 870 (-35.5 per cent)
Top 10 Best-selling Small cars – 2013 to date

Mazda 3 – 10,509 (-9.4 per cent)
Toyota Corolla – 9630 (+1.4 per cent)
Hyundai i30 – 6656 (-0.2 per cent)
Holden Cruze – 5702 (-30.5 per cent)
Ford Focus – 5187 (+11.4 per cent)
Honda Civic – 4212 (+226.8 per cent)
Nissan Pulsar – 3267 (not listed)
Volkswagen Golf – 2872 (-2.7 per cent)
Mitsubishi Lancer – 2274 (-50.3 per cent)
Hyundai Elantra – 2170 (+3.8 per cent)

Large cars: March 2013 sales overview | CarAdvice

Top 5 Best-selling Large Cars – March 2013

Holden Commodore – 1606
Ford Falcon – 831
Toyota Aurion – 498
Honda Accord – 288
Nissan Maxima – 103

Top 5 Best-selling Large Cars – 2013 to date

Holden Commodore – 4995
Ford Falcon – 2477
Toyota Aurion – 1095
Honda Accord – 870
Nissan Maxima – 311