Australian Large car future

[JPFS1]

Sorry if this is a repost... A very good article.

Originally Posted by Carpoint

Where to for the large Aussie?

It was a tough monthly media brief for Ford Australia President, Tom Gorman, last week. For the fifth month in a row, the Australian large car segment has settled at just over 13 per cent of the total market after plunging to a dismal 12.4 per cent in May. Only last year it came in at over 16 per cent yet in 1997, Gorman's predecessor would have been hoping that it was going to stabilise at 28.3 per cent. Now Gorman is speculating that it might rally to 14 per cent in 2007 but he didn't sound convinced.

When you have the oldest model in the large car segment as Ford does, the full brunt of the decline is reflected in market share. Ford's total passenger car share slipped to just 9.8 per cent for October compared to last year's annual average of 11.7 per cent. Even Holden with its one-billion-dollar Commodore leading the charge came in below last year's result with an October share of 19.5 per cent even with its new armoury of Asia-sourced small cars and LCVs and a new Captiva SUV.

Even if the VE Commodore posted 5455 October sales compared to the VZ's 4906 last year, the loss in Monaro and Commodore ute sales more than negates that gain.

Ford's loss in market share in 2006 is only exceeded by Holden's 2006 results to date. Ford would normally dismiss these results as inconsequential when its Territory SUV was kicking goals in the medium SUV market but Gorman had no upside this month.

Like large cars, the medium SUV segment has declined -- from seven per cent to the mid-five range in just 12 months. The Territory outsells the Toyota Kluger and Prado combined, thus it also carries the full brunt of this decline as its October sales slipped from 1418 last year to 1349.Yet Ford buyers are still dialling in the top-of-the-range Turbo Territory at over 180 per month and the top of the range Territory Ghia outsells the base model by two to one!

Combined Ford Fairlane/LTD sales declined to just 52 sales in October compared to 96 for the same month last year. Significantly, Holden's new Statesman posted 268 sales compared to 178 in October last year while the Caprice's October tally of 165 was a huge boost over last year's 51.

Unless Ford can win an export market for the Fairlane to allow it to match the big export driven development program behind the latest Statesman and Caprice, there is no point continuing at this level. Gorman assured reporters that the current long-wheelbase models can continue at these tiny levels but not beyond this model series.

At a big picture level, combined local production now accounts for only 20.7 per cent of the total market in 2006. This has dropped another five per cent since last year already. In 1997, local producers accounted for 37.8 per cent of the market.

Ford now sells the most Australian-built cars. While this is good chest-beating material, it means the Blue Oval doesn't have an export buffer like Toyota and Holden. This dramatic decline explains why Ford has been forced to follow Mitsubishi and Holden in downsizing its local manufacturing capacity. Holden's local production now accounts for only 7.9 per cent of the market while Mitsubishi's locally built contribution to the local market has shrunk from 5.7 per cent in 1997 to just 1.4 per cent in 2006.

When the Australian market is still heading towards its second best year on record, where are the sales that once went to locally produced cars going?

The light car segment has been the big winner with the Toyota Yaris heading the charge while the Korean Barina, Hyundai Getz, Suzuki Swift and Ford Fiesta picked up extra sales. The modest growth in small car sales have helped the Honda Civic, Ford Focus and Peugeot 307 experience new growth while the lift in medium sales have kicked up the VW Jetta and Passat, Hyundai Sonata and Subaru Liberty while the Mazda6, Camry 4, Vectra and Accord Euro have slipped. The big winner in the Upper Large car segment for the year has been the Chrysler 300C.

There has also been strong growth in the 4x4 commercials, traditionally the stronghold of Japanese twin cab one-tonners. Big sales boosts for the new Nissan Navara, Toyota HiLux and Mitsubishi Triton have impacted on the whole market. The switch from medium to compact SUVs has made winners of the Toyota RAV4, Suzuki Grand Vitara and Honda CRV despite the CRV's last year in this configuration. The Nissan Pathfinder is the only medium SUV to show sales growth but only because it is the first new Pathfinder in 10 years.

Hidden in these figures is a steady growth in prestige models spread across a range of manufacturers. While each increment barely registers on the radar, they also collectively explain some of the shift away from Australian large cars.

Although the Commodore has regained the most popular Australian nameplate, Corolla has headed it some months this year. The little and large pairing is followed by Falcon then Mazda3. The Toyota Yaris, Camry and Hyundai Getz follow before the Toyota Hilux 4X4 appears at number eight. The Holden Astra and Ford Territory complete the Top 10 with Ford Focus knocking on the door. In October, the Focus actually crept into the Top 10 while knocking out the Territory.

There are several factors at work. First is a constantly changing new range of vehicles that have never been so affordable. In this new market, there is no loyalty to favourites from even two or three years ago. Where buyers would once front up for a later version of the same, Australians are now using changeover time to experience something new and different.

Importers who can draw on an armoury of new models have learned to play the substitution game. As Honda’s Accord Euro declines, a new Civic booms. As Toyota Corolla sales steady, a new Yaris booms. As Mazda3 and 6 sales slip, a new CX-7 and Mazda2 will join the fray. As Kluger fades, a new RAV4 booms and so on.

According to Gorman, a hike in interest rates serves up a double disadvantage to Australian manufacturers. It adds more interest to a lease or loan for a local car compared to cheaper light and small imports. It then pushes up the exchange rate making exports harder to win and delivers a free kick to importers who can cut their prices and increase their share even further. This is a worry when neither the locally-built Mitsubishi 380 nor Toyota Camry V6/Aurion appear in the Top 15 nameplates. It also forces local manufacturers to source more imported content to stay competitive.

Australian large cars have traditionally generated such entrenched loyalties that the average model generation has spanned over 10 years. As Ford enters its fifth year with its 2002 BA body shape and only the most superficial tweaks, a loyal buyer is under unprecedented pressure to go elsewhere.

Consider also that Ford’s ground-breaking Territory is now entering its third year and there is still no hint of an appearance change or significant improvements.

There was another October trend that Gorman noted. It was the growth in private buyers compared to last year (36.9 vs 34.6 per cent of the total) while business buyers barely grew. These private buyers are driving the growth in low outlay, low running-cost, light cars.

Government purchases have slipped by a significant 8.6 per cent this year as the GST regime has generated longer ownership periods. Sensitivity to environmental and cost issues has also forced government buyers to turn their back on large Australian cars in favour of light and small car imports.

The outlook? Gorman's hopes that the large car segment may stabilise as high as 14 per cent are probably optimistic. Although the Aurion and new Commodore have generated new interest in the segment as hoped, so have new models in other segments such as the Holden Captiva, Toyota RAV4, a host of new diesels and cheap Europeans. Jitters about fuel prices have also introduced a caution that counters at least some of the excitement.

The growth in the Australian market can no longer be explained by population growth or a post-recession in catch-up sales. It is reflecting a boost in affluence that is generating US-style multi-vehicle ownership patterns and a turnover of vehicles that are still relatively new.

Feedback from sales staff suggest that buyers are no longer purchasing a single Australian large car to cover family needs but splitting up their needs into several purchases.

As Australian large cars lose their place as the default purchase for the average Aussie family as well as the fleet and government buyer and executive or the self-employed buyer, then who is left?

As Mitsubishi is finding, not that many… Unless you can come up with a unique selling proposition. There is now emerging evidence that the Australian large car is becoming more of an emotional or discretionary choice. Put simply, the buyer has to want one and be prepared to make adjustments to cover the extra costs. Once the decision is made to buy a large Australian car, these new buyers then concentrate on finding the level that best reflects who they are as they stay well away from the fleet specials.

An informal 'survey' of Victorian rural Holden dealers revealed that Holden's new Captiva is generating as much (if not more) curiosity as the VE Commodore. And this is in a context/environment where the Commodore is most suited.

The same trend was apparent at the recent Sydney motor show where visitors were forming lines to sample the Captiva as the new Commodores were ignored.

Holden rural sales staff report that although the hype around the base Omega is generating interest, the ambience inside the cabin is sending buyers elsewhere or upmarket. Holden's and HSV's boom in upper level sales substantiates this feedback and may not be just the usual new model trend.

Ford's latest moves suggest that Gorman has been on top of this trend despite the company's gloomy October result.

When CarPoint questioned him about the intent of the new BF Mark II Falcon's Euro Sports Package which offers almost $4000 worth of extra features for just $250, Gorman answered somewhat surprisingly that it was aimed at the 85 per cent of Falcon buyers who were business or fleet buyers. This is in contrast to the Holden strategy of the VE Commodore V Series extra value special that Holden claims is aimed at private buyers.

Gorman explained that when so many within this 85 per cent are now able to choose what they drive on the company's money, Ford had to inject some extra appeal in the Falcon range.

It is also significant that Ford focused most of its facelift marketing dollar on the BF Mark II Fairmont Ghia, a low-volume, top-shelf model that usually languishes at facelift time like the Fairlane. Where the VE Holden Calais is quite clinical inside, Ford has boosted the emotional component of the Ghia cabin and exterior dramatically compared to the overall Mark II facelift.

Ford’s latest moves could be the litmus test for the future direction of the Australian large car market. Significantly, Mitsubishi has gone down the same track with its Platinum edition of the 380 and coming performance models. CarPoint believes that Ford's timing for this shift in direction is no coincidence when the final direction of the Falcon's 2008 replacement must be causing concern.

Holden's unexpected success at the premium levels and Ford's ongoing sales for its most expensive Territory models both defy the Australian large car and medium SUV trend. Thus both may be showing the way of the future.

If all local manufacturers can inject enough emotive appeal to win Australian buyers back and encourage them to spend more in this most competitive of markets, then they will be absolute winners in the export stakes as Holden and Toyota are proving already.

There is one proviso. Unless there are exports to fund more regular changes and 'bling' updates as Holden chief Denny Mooney says must now happen, then each Australian large car or SUV that cannot fund the same level of change risks following the Fairlane into almost certain oblivion.

If the Australian large car market locks in much below 14 per cent share level, both Ford and Mitsubishi are in a race against time to create an export structure. Significantly, Gorman's briefing ended with news that this was a hot topic during Bill Ford's recent visit to Australia.

[GXL078]

After a trip to the U.K. and Europe one wonders of the need for such large cars that don't carry any extra passengers. I did see a whole lot of late model eurocars with caravans on them, overheated beside the motorway in the queue for a tunnel...OK so the large cars are useful for our great outback but only about 5% of vehicles ever go there, and you can cruise all day at the speed limit with just about any 2L these days.

[Poetic Justice]

Awesome read... think it sums everything up completely....

I think Aust manufacturers need to realise that the entry level family sedan isn't what we all want these days...

That said, I think Ford should produce the Falcon with alot of features in the entry level, but also start producing cars like the Fiesta/Focus as well.

[Polyal]

They will never make small cars here, no point.

There is still a market for the large car, its just not travelling to well at the moment. There has been a mad rush to small cars, will this last? I dont think so.

People will realise how you become restricted in what you can do, and then when its time to update, I reakon it will be a large car again. Much of this is because of fuel prices, which everyone will be more used to in a few years.

As I gaze into my crystal ball this is what I see: Large car sales will grow again, maybe not this yea, maybe not next but it will happen. In the mean time, FoA need to have an export market, without it they will perish if Orion is not sold overseas and atleast profits here.

Australia is not were the cash is at, there are so many countries where a falcon would fit in the Ford plan very nicely, and thats what FoA needs to secure if it wants to exists.

Lifes one big cycle, its what you do in the down time that counts.
.

[turboute]

For Ford to get into the game again next year they would have to fit a Jag Deisel, It would be the only locally built car in it's class. They will have to formulate a strategy with Ford (global) to export the new falcon overseas to get the same saftey factor as toyota and holden. Until they release the new falcon I doubt they will get much in the way of a decent market share without offering huge dicounts.

[outback_ute]

One major issue that was barely touched is the change to more novated leasing in fleet cars, which after all make up the majority of Falcon/Commodore sales, and so many of those people choosing something else.

I agree with a lot of the comments above, I think there will be a swing back, but they need the export markets as well.

The issue of the BA through to BF2 being little-changed in 5 yrs is not insignificant either I think, it seems Ford is trying the European model of a long model run with little change, while the market is still has the expectation of regular facelifts (approx 18mths) and the Falcon is suffering from not being "fresh". I think they could get away with "mechanical" upgrades at 18mths, but a 3 yearly facelift to coincide with the most common lease term would be a good idea.

[ivorya]

I suppose many people are scared away with the fact that Large cars no longer hold their value after a no. of years. A smaller car (Corolla eg.) will still sell for just under RRP after a couple of years running. I believe this and the perception of motorists who believe that these large cars are always fuel thirsty buggers, is contibuting to the large car decline.

[Paull]

A few weeks ago there was a thread regarding the Force 8 and possible replacement of the Fairlane/LTD. Anyone know why this thread dis-appeared? I got an email saying there was a response and upon clicking on it, no more thread???? Very strange here at times!!!

[pauljh74]

Originally Posted by Polyal

There is still a market for the large car, its just not travelling to well at the moment. There has been a mad rush to small cars, will this last? I dont think so.

If you look at all the cars now, your "small cars" have now grown up to the point they can easily carry a small family and comfortably carry a larger driver (perhaps at the expense of rear seat passengers). Power is up as has been the case in most classes, and gearboxes with extra ratios help performance - so lack of power isn't as big an issue. So the people who are open to a switch have moved to these cars.
Large cars are still relevant, if SUVs are viable choices for urban families, then the large passenger sedan/wagon is even more suitable as they have similar amounts of space, perform better and are more efficient.

[uranium_death]

Originally Posted by blackout

Awesome read... think it sums everything up completely....

I think Aust manufacturers need to realise that the entry level family sedan isn't what we all want these days...

That said, I think Ford should produce the Falcon with alot of features in the entry level, but also start producing cars like the Fiesta/Focus as well.

Speak for yourself.
The family sedan is all I want to drive.
I don't want a Skyline, Porsche, Ferrari etc. I want a bloody Falcon.

The day that the family sedan (or Falcon) disappears is the day I attach a rocket to my bottom and fly away!

[feebs]

Originally Posted by uranium_death

I don't want a Skyline, Porsche, Ferrari etc. I want a bloody Falcon.
!

ya f**ken hey!!!

[feebs]

except.. the Ferrari,, I would have one ...

[vztrt]

Originally Posted by Polyal

They will never make small cars here, no point.

Ford did a while back, but I agree that small cars wont be built here. The profit made on small cars is small. So if the Large car industry dies don't expect the car to be built here, mind you I wouldn't be surprised if the cars are still designed here.

[uranium_death]

Originally Posted by feebs

except.. the Ferrari,, I would have one ...

I wouldn't. I'd take the Ferrari, sell it and use it to buy Falcons.

Ferrari doesn't belong in Australia. With 110km/h speed limits you can't enjoy it.
So I'll take my Falcons thanks very much.

In Australia, a Ferrari is nothing but a status symbol.

[Gobes32]

My take on the large car crisis is that oil prices and aging platforms are major reasons for the fall in sales. You can't deny that fuel prices scared a lot of large car buyers out of the market. For some people it will always be a big rear wheel drive sedan or nothing, but we live in an age where people shop more smartly and there is more on offer than ever before and dropped tariffs have given importers a free kick. A Focus or any other small car will never be built in Australia due to mods to Broadmeadows to acommodate small car manufacturing and the fact that the europeans can build them a lot cheaper than us Aussies. We build big sedans and there is a market for them but Ford Australia need to secure a export deal to save the Falcon/Fairlane/Territory. It is unlikely we will export to America due to militant american auto unions, but we can to middle east, south africa, europe, asia etc. Australia is a big country with a small new car market. Ford America need to let us sell our quality cars outside of our own backyard. The falcons survival depends on it.

[SVR73]

Actually I'd be very happy with an R33-35 skyline.
I certainly hope that ford do not go the VE-380 design or anywhere near it with the 2008 falcon.

Am stickn with me AU!

[chich]

I havn't bothered reading the article but by reading the responses i get the basic jist of what its about. Sorry to disappoint guys but the one thing you can be certain about is that no additional variants will ever be built here in Australia. Ford Australia will stick to building Falcon and Territory variants for local and hopefully export markets. Why would you build a new small for example, when you can assemble it in a low cost location for 1/20th of the labour costs?? Australian auto manufacturers will simply become centres of competance in the future - I.e the development and engineering will be done here, and the assembly will happen in low cost countries like China, India and Turkey. Its all about profit..

No profit = no growth = better off staying home watching tv and eating chips

[outback_ute]

Originally Posted by Paull

A few weeks ago there was a thread regarding the Force 8 and possible replacement of the Fairlane/LTD. Anyone know why this thread dis-appeared? I got an email saying there was a response and upon clicking on it, no more thread???? Very strange here at times!!!

It was probably merged into the main Force 6/Force 8 thread, there have been approx 24 dozen started on the topic.

[XR8-260]

The all-new falcon can't come soon enough - hopefully more power and less lard!

[T3ts50]

Originally Posted by pauljh74

If you look at all the cars now, your "small cars" have now grown up to the point they can easily carry a small family and comfortably carry a larger driver (perhaps at the expense of rear seat passengers). Power is up as has been the case in most classes, and gearboxes with extra ratios help performance - so lack of power isn't as big an issue. So the people who are open to a switch have moved to these cars.
Large cars are still relevant, if SUVs are viable choices for urban families, then the large passenger sedan/wagon is even more suitable as they have similar amounts of space, perform better and are more efficient.

Exactyly, my mum just bought a brand new Focus which I occasionally drive, plenty of legroom and adequate performance (compared to my magna anyway). Though if I had a family, I dont think the size would be adequate if I had kids in there teens unless they were really short.

[monaroCountry]

There should always be a market for a large car, ford should start exporting more of their products to remain in the market.

Building a medium sized car is a death trap for both holden and ford. How many mid sized cars do you see?

[Poetic Justice]

Originally Posted by uranium_death

Speak for yourself.
The family sedan is all I want to drive.
I don't want a Skyline, Porsche, Ferrari etc. I want a bloody Falcon.

The day that the family sedan (or Falcon) disappears is the day I attach a rocket to my bottom and fly away!

This is the problem with discussing the motor industry on a car enthusiast forum. You forget that the majority of consumers are in fact NOT car enthusiasts and they make for a larger group of people who actually buy these cars. They decide what the car makers do. Do you think Toyota would release the Aurion in auto only with front wheel drive and traction control that can't be turned off if it was designed and built around what an enthusiasts forum said? Hrmm....

I'd say that Toyota has spent enough on market research to know more of how the market will work for them more than any of us on this forum. Regardless of what the majority of people on here want (rwd, v8 power) the group here on the forums and car enthusiasts as a whole is only a minority when it comes to looking at the big picture.

My argument to that, however, is that if Toyota bothered to develop the Aurion on a rwd platform, then it would still appeal to the people who care not about FWD/RWD and also cater for the people who can't seem to let go of the issue. Even those who haven't driven it and base their decisions upon such a vehicle just because you know it has FWD.

The other issue here is that people as well as companies providing fleet cars to staff are looking at the cost of life involved in purchasing car. This accounts for the original purchase price, cost of maintenance and resale value at the end of the term. Gone are the days where fleets will buy purely because they got a good deal on the car. If you purchased a Commodore or Falcon for near cost price you'd be laughing, but in 2-3 years time when it's time to upgrade and you've lost 50% or more on the original purchase price you have to agree that is a kick in the tits. So some how, Falcon and Commodore need to rebuild an ability to hold market value. How that's possible I wouldn't have a clue...

Seems to work for Toyota though.

[Poetic Justice]

Originally Posted by monaroCountry

There should always be a market for a large car, ford should start exporting more of their products to remain in the market.

Building a medium sized car is a death trap for both holden and ford. How many mid sized cars do you see?

A darn site more than I used to. Mazda 6? Mazda 3 - almost a mid sized car really. Honda Accord Euro. Toyota Camry. These cars are quite popular in reality.

They are adequately sized, good on fuel and reliable.

So why shouldn't Holden and Ford tap into this market to try and keep a share of it? I think the Torana concept and the new Mondeo would do quite well and I think we've all agreed on that fact.

If the manufacturers were to invest in developing a mid sized car, being able to fund it properly and being able to price it right with still having a decent amount of margain in it, then why would it be a death trap?

[blutura]

Originally Posted by uranium_death

The day that the family sedan (or Falcon) disappears is the day I attach a rocket to my bottom and fly away!

Oh? Something for us to look forward to then!

[XR Martin]

Originally Posted by acosta32

My take on the large car crisis is that oil prices and aging platforms are major reasons for the fall in sales. You can't deny that fuel prices scared a lot of large car buyers out of the market. For some people it will always be a big rear wheel drive sedan or nothing, but we live in an age where people shop more smartly and there is more on offer than ever before and dropped tariffs have given importers a free kick. A Focus or any other small car will never be built in Australia due to mods to Broadmeadows to acommodate small car manufacturing and the fact that the europeans can build them a lot cheaper than us Aussies.

Focus sold here is from South Africa, not Europe. A European Focus would cost alot more.(like $10k more)

[uranium_death]

Originally Posted by blutura

Oh? Something for us to look forward to then!

Depends on who you are.
But just because I fly away, doesn't mean I'll stop frequenting this place.
Actually, I'll do it just to spite.
Yes...Victory is Mine!

[T3ts50]

Originally Posted by XR6 Martin

Focus sold here is from South Africa, not Europe. A European Focus would cost alot more.(like $10k more)

What about the Fiesta, they are built in Germany, how come they are around the same price as alot of its Korean competitors?

[Polyal]

Originally Posted by T3ts50

What about the Fiesta, they are built in Germany, how come they are around the same price as alot of its Korean competitors?

I would say because ford already knows they are making stuff all on them anyway. They need volume to get anywhere, so atleast that the word goes out then others will follow.

I would say that there would be alot of buyers that know nothing about the cars they purchase, and that they just do it because its popular; ala corrola.