With Ford’s announcement that it will cease Australian manufacturing in 2016, all eyes have turned to the remaining two (Holden and Toyota), and exactly how much demand remains for Australian-made cars.
As the Australian federal election looms closer, the incumbent Labour government has announced a $200 Million rescue package which is designed to keep Holden and Toyota happy to stay local for at least the next election cycle. PM Rudd was not drawn into whether the extra ‘incentive’ money was to offset the damage caused by changes to Fringe Benefits Tax laws restricting the claimable amount on company vehicles.
Labelling something a ‘rescue’ plan is misleading when a rescue isn’t guaranteed.
There is no doubt that Australia’s automotive manufacturing provides a critical mass of local demand, which parts producers use to help subsidise their other activities. As Holden continues to source more of its parts from overseas (in spite of the efforts of both Automotive Supplier Advocate Will Angove and Automotive Envoy John Conomos), the squeeze on the cost competitiveness of local parts producers continues.
Australia’s car industry continues to meet record demand for imported cars quite well, maintaining healthy profitability. The real issue is the often-quoted fact that local producers need to move 100,000 cars annually to remain viable. Ford was down to 20,000 Falcons and 18,000 Territories…
The federal opposition has claimed it is committed to the Australian automotive manufacturing sector, although it will reduce funding for the Automotive Transformation Scheme by $500 million. Most of the LNP eggs are focused on increased competitiveness from scrapping the carbon tax.
Either way, Australian manufacturing will be reliant upon government intervention in one way or another for the foreseeable future.
