Aussie Car Industry in Turmoil

Peter Martin summarises Australian car industries issues. It doesn't look too good. The Australian public are not buying what is being offered. The industry is being propped up by huge government direct and indirect subsidies.

Here in Adelaide, Holden (General Motors) just laid off 600 people after closing a whole shift a couple of years ago. Mitsubishi is only open because of political pressure and has an embarrassingly low output. Some of the people who work for me were there yesterday doing some work. All the storage parking lots, which used to be chock a block are now empty and models are being made to order. Many of the parts suppliers are being taken to the cleaners by overseas competitors.

The part of the article that surprised me was how many cars are bought for fleet use. Over 80 percent are sold to car hire companies, large companies and the government. Parking in some of the garages in Adelaide, there are levels and levels of state fleet cars, waiting to be used. The only company that has a large proportion of showroom sales is Toyota, which sells cars people want to buy.

The Australian car industry is obsessed with large cars. Hardly any four cylinder cars are sold. This obsession may well contribute to the demise.

Then there is the madness of fringe benefits tax, where people are encouraged to rack up the miles to get their tax down. Now there is an eco unfriendly piece of public policy that should be shot at dawn.

Australians are very happy to purchase imported cars, especially fuel efficient ones. There are not too many Australian cars that meet that criteria.