Ford to close Aussie operations in 2016

[dhs.buckley]

Less support, lower tariffs, no industry

Date May 24, 2013
Read later





Clay Lucas

Workplace Editor for The Age

View more articles from Clay Lucas

Follow Clay on TwitterEmail Clay






According to a group of auto manufacturers who went to Industry Minister Greg Combet last November asking for extra support, Australian-made cars had shrunk by late 2011 to just 14 per cent of the market.

A submission by the Federation of Automotive Product Manufacturers to the minister said that of the more than 1 million cars bought in Australia in 2011, about 86 per cent were imported.

The report warned that without further state and federal subsidies, car companies like Ford could close. This would have huge knock-on effects to parts suppliers.

''The industry is at serious risk of failing without further, considered intervention, stimulus and support,'' the report said.

Advertisement

It blamed the high Australian dollar and the poor economies of the countries that had traditionally imported Australian cars for the local industry's crisis.

About 80 per cent of cars imported into Australia come from Japan, Thailand, Korea or Germany, the report said. But many of these countries retained huge tariffs on imported Australian cars.

This was despite Australia reducing its tariff on imported vehicles to between 0 and 5 per cent. Thailand, for example, charged an Australian company wanting to export to the country a tariff up to 80 per cent.

The report also compared what other countries with car industries invested per capita via government subsidies. ''The Australian automotive industry received significant support from the Australian government,'' the report said. But this assistance was ''dwarfed in comparison to assistance provided to many other automotive sectors in other countries''.

Sweden was the biggest subsidiser of its car industry, giving manufacturers $US330 per citizen, the United States $US260, France $US150 and Canada $US100. By comparison, Australia gave car makers $US18 per person.

The report also said that the benefits of cheaper imported cars were not necessarily flowing to consumers as car companies chose instead to invest the savings in marketing their brands.

Also, customers buying overseas cars were more likely to get a discount because dealers had more flexibility to give a discount.

The report called on the government to re-apply a 10 per cent cent tariff on all imported vehicles, adding $2600 to the cost. The report said it would likely reduce demand for imported cars by 5 per cent, with the purchases going instead to Australian manufacturers.