Tariff cuts to proceed

[Bossxr8]

Originally Posted by SB076

Interesting article in today's John Mellor's GoAutoNews - stating that the the Australian economy is better off with tarrif's than with out. Professor Dixon (economist) who created the model stated that the productivity commission calcultated things wrongly

I read that, they say that because of the incorrect info it would have thrown off the results. They suggested lowering tariffs was good but it should have been the opposite. :

[Wretched]

Some interesting articles.

http://blog.autospeed.com/2008/08/25...could-be-near/

"...I think that unless Holden (and Ford) bite a bullet of similar magnitude, they will be sunk. Those who sneer at Commodores as being fit only for bogans are not going to change their views because a Commodore loses maybe 50kg. They’re not going to look at a Commodore with new eyes because it can drink E85. They’re not even going to look at a brand new FG Falcon model because there’s an option pack made available at no extra cost.

Nope, to make an impact, these companies need to make radical changes.

A Commodore with the 2.8 litre V6 and the GM hybrid system. Or a Falcon with a downsized V6 and liquid LPG injection. Both companies have the technology available – GM right now and Ford very shortly..."

I think Julian has some good points in here. Of course we don't all agree with what he says and I suspect many here will get upset with what he says but he is right in some of what he says, like it or not major change has to occur if these companies are to stay successful.

http://www.theaustralian.news.com.au...-28737,00.html

"...Put this all together and it's no surprise the numbers have been going against the locals. Last year, the four Australian makers - remember Mitsubishi? - supplied 20 per cent of the market from Australian factories, or 200,000 vehicles. Ten years ago, they built 255,000 out of 807,000: a 32 per cent share.

Look closely and it gets worse. About 75 per cent of those 200,000 were bought by fleets or government, while private buyers - who are fussier but spend more - account for just 25 per cent. So last year, only 50,000 locally built cars were bought by those who actually have to put their hands in their pockets, a mere 5per cent of the Australian market. Put another way, at least one of the import-only brands with lots of showroom appeal - Mazda - sold to more private buyers than all the local makers put together.

Increasingly, fleets and governments aren't coming to the party either. Government purchasing of all vehicles has slowed recently but it's most pronounced when you focus on cars.

In 2007, governments bought 13,000 fewer cars than in 2005 - a 22 per cent decline - and almost all of the lost sales would have been locally built. So far in 2008, governments have purchased 5000 fewer cars than at the same stage last year..."

"...Many of these demands have been met in the review, which recommends doubling the green car fund and freeing it from a 3:1 ratio of government money to investment. And cash.

So give them more money and everything will be all right? No, it won't, because their record of reading the market is clearly awful and their solution is wrong....

"...If the review's recommendations are accepted, we will continue to pay a high price for cars through an increased burden on the public purse to a higher price on every vehicle. Calculations cited in the review put the total subsidy on every locally built car at $4000 in 2006-07. A Productivity Commission calculation suggests it will cost $300,000 to save each industry job that would be lost if ACIS ends in 2015..."

[SB076]

I agree the industry needs to make changes, however I think that during this time the industry is at is most vulnerable, to remove tarriffs at this time could effectively finish off the industry. As a consequence of that the loss of 65,000 jobs would have a major effect on the economy.

Interesting to note some of the experts comments (from Prof Dixon and Dr Gruen)

In fact, there could be an annual loss to the economy of up to $92 million, they said.

"I'm very confident that there are losses from doing this, to the whole economy," Dr Gruen said.

"They're small losses but it just amazes me that we are sleep walking our way into a mistake.

"This is dumb," he added. "This is doing something that will do quite a lot of harm to the industry."

Dr Gruen said as a result of the error, a major producer could exit the industry when the right economic benefit was not to exit the industry

Everyone is entitled to their opinion but there is a lot at stake not only to the industry but also to the Australian economy. You also need to realise that ACIS is a credit based system, where companys can claim % of investment (R&D, P & E) which translates to credits. These credits are purchased by other companies to offset tarrifs on imported product.