New Car Manufacturing in Australia: Is the ship sinking?

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New Car Manufacturing in Australia: Is the ship sinking?
By John Cadogan | June 25th, 2011 42 Comments


The Australian new car manufacturing industry is on its knees. If we were discussing a horse race, the likelihood of the industry surviving the next decade – in particular the survival of two of the three players – would be, to put it mildly, a long shot. If the Australian new car manufacturing industry were a patient in a hospital, sooner or later a rational discussion about maintaining ongoing life support, and having the priest on speed-dial, would need to be had.

Let’s have that discussion now.

Just over a year ago, John Wormald, the principal of respected international automotive think tank and government advisor, Autopolis, declared that Ford Australia would be “the next Mitsubishi”, a reference to Mitsubishi Motors Australia Limited’s withdrawal from local manufacturing a few years earlier. Mr Wormald said this would occur because Ford Australia, among the three local manufacturers, was the most isolated from its parent company’s operations.

Since Mr Wormald’s assessment, things have gotten a lot worse at Ford Australia. Fast forward to the end of 2010, and annual Falcon sales slumped to their lowest level in more than a decade. Just 29,516 Falcons were sold that year, a reduction of a staggering 60 per cent since 2003 when 73,220 Falcons rolled off showroom floors. This year, in January, Falcon sales experienced their worst month in at least 15 years. In May, a fairly typical month for car sales in Australia, Falcon sales were 1331 units – a 59 per cent drop, compared with May 2010. This is a massive drop on the back of a sustained massive drop in sales – the double-whammy of exactly how you don’t want your sales chart to look if you’re in business. Hundreds of unsold Falcons crowded the grass surrounding the Broadmeadows factory, and working hours at the plant were cut back.

When you’re a factory, production has to equal sales. Otherwise: massive problem. Death by oversupply.

http://www.caradvice.com.au/124635/n...-ship-sinking/

Here is our problem in a nut shell,

Australia is one of only 13 countries in the developed world with the skill and ability to engineer and build a car from the ground up. We also have the lowest tariff barriers.