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NUMBERS

Rick-Davies-numbers
Do the Numbers stack up? My blog GONE was written on the day GM announced that it would cease local manufacture. The blog was an expression of the concern that has been growing within me for a large number of years. I also wrote that Toyota could not survive on its own. I still think it is an accurate assessment. Here’s why.

In 2003 the Australian new car market totalled a little over 909,000 units. It was a new record. 10 years later, the market reached another new record of 1.136 million having grown around 25% in that time.

In 2003 the highest selling car was Commodore with 86,553 accounting for 9.5% of the total market. Falcon was second with 73,220 and 8.1%. The largest selling small car was the imported Corolla with 36,128, a 4% market share.

Last year the highest selling car was the imported Corolla – 43,498 units – but its share of the expanded market was only 3.8%.

Faced with an incredible selection of very good cars in an open market, Australians have done exactly what was to have been expected. They have considered the options and exercised choice.

If the Corolla was built in Australia, would it sell more units? Perhaps. Twice as many? I seriously doubt it.

So perhaps export volume is the key. OK, let’s consider that. Without local content requirements (and tariffs to support them), to be cost competitive with high volume imports, there needs to be a significant amount of imported content in any locally built car. So the manufacturer needs to import components to then export them in fully built cars to get the export volumes necessary to support local build. Can anyone think of anywhere further away than Australia from both the high volume component makers and high volume car markets? By its location on the globe, Australia is at a natural cost disadvantage when it first has to import goods to be able to add value, then export them.

Without decent local volume, the Australian component makers will struggle, meaning more imported components, meaning more import costs … you get the picture, I’m sure.

And on top of that, which car to build? Which one of the hundreds on the Australian market is capable of selling twice as many as Corolla, or Mazda 3, or i30, or HiLux just because it is Australian built?

And that, my friends, is why I fear the Australian automotive industry is now just a few short years from being a thing of the past. Then we won’t have to worry about supporting an industry – we will simply import all our needs and trust that the importers will do what is right by the country.

Or perhaps we can just ride bikes – the photo is of the Tour as it passed the front of the Aldinga Arts Eco Village for the final time on Saturday (taken with my new photographic device!)

Cheers

Rick