Whither Australia’s automotive industry?

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Down-under original JOHN WEINTHAL, once the 'mouth of the motor industry' in Britain, offers a sardonic perspective on vehicle manufacture in his home country, a unique faraway market...
The Australian motor industry is not altogether unlike some people's perceptions of the nation as a whole - illogical, irrational and maybe even a little irrelevant, yet somehow bafflingly ongoing and largely successful.

This land of just 20 million people recorded 955,229 vehicle sales in 2004 - a new peak, five per cent up on 2003, and a whopping 23.6 per cent higher than three years earlier.

The nation's Federal Chamber of Automotive Industries - FCAI - anticipated a new high for 2005 of around 980,000 with the magic million not impossible and certainly expected within the near future.
All sounds good.

Four car companies produce in Australia - not assembly, but full-on manufacture of Australian originals. They are General Motors' Holden, Ford, Toyota and Mitsubishi. Each is also a substantial importer of cars, light commercials, people movers, Sport Utility Vehicles and workhorse 4x4s. Nevertheless, this article concentrates on the Australian motor manufacturing industry.

Three of the makers build a range of derivatives essentially on the same platform. The exception, as in so many things these days, is Mitsubishi whose sole products are four-door medium-large 3.5-litre V6-powered, front-wheel-drive sedans and wagons called Magna or Verada depending on specification. More on the beleaguered Mitsu later.

Holden and Ford make large six-cylinder- and V8-powered, rear-drive cars, station wagons and pickups - or 'utes' in the Australian vernacular. Each also has an SUV based on the same platform, and Holden has its Commodore-based two-door Monaro coupé.

Toyota's offering is the medium-large Camry sedan with four-cylinder or V6 power. A larger variant - the American-designed, Australian-manufactured Avalon - utilises the same 3.5-litre V6 engine and front-wheel-drive drivetrain. There is currently no Camry station wagon.

Of the 955,000 vehicles sold in Australia in 2004, some 901,000 fell into categories where The Four have local offerings - sedans, SUVs and two- and four-wheel-drive pickups. Of these 901,000 sales, local products accounted for less than one third - just 274,400, or fewer vehicles from four makers than are regularly produced in single plants across North America, Europe, North America, Japan, Korea and China.

Can it make sense? Did it ever make sense that four makers should each produce unique vehicles in such relatively tiny numbers, and keep doing so over many decades?

The answer is probably 'No'. But this is Australia. That answer, among other things, does not factor in either political reality or to some degree the loss of face a pull-out might involve.

Politically, the Australia auto industry has been a long-term hot potato. Successive governments - both Federal and State - have intervened in a variety of ways from direct injection of funds to heavy-handed local design rules, various tariffs and pleas to parent companies in the US and Japan.

In 2004 the Toyota brand was Number 1 in Australia for the second successive year with 201,737 sales - the first time any vehicle maker had topped 200,000 in a year. Holden (178,000) came second, ahead of Ford (135,000), leading sole-importer Nissan (63,600), Mitsubishi (57,000) and Mazda (55,500).
When it came to locally-manufactured product, Holden with 111,200 new sales topped Ford (101,300) and Toyota (45,900) with Mitsubishi trailing a distant fourth with just 16,000 sales, down more than 20 per cent from 21,500 in 2003.

Ford and GM also sold fewer cars in 2004, but only marginally. Toyota alone boosted sales of its local product.

Toyota's third Ace is in exports. Total industry exports in 2004 were valued at nearly $5 billion, including components worth $2 billion. This was three times the value of auto product exports in 1995.
Automotive exports now rank sixth in value, and are almost as important as iron ore. They exceed those of traditional export sectors such as wheat, beef and wool, and are worth more than twice as much as wine. The automotive sector is Australia's leading exporter of complex manufactured products, representing almost four per cent of all merchandise exports and more than 12 per cent of manufactured exports.

Toyota's auto exports in 2004 totalled $1.2 billion, including 65,400 cars. This was some 25 per cent better than Holden. Toyota has boosted its exports by 370 per cent since 1995, and now has 23 countries on its books. However, the Middle East accounts for 94 per cent, and the Australian Camry is the top-selling car in Saudi Arabia.

It does not take much to see that Mitsubishi is clinging to Australian manufacture by its finger nails. The company's widely-publicised home and North American problems have been extensively reported in Australia with fitting 'shock horror' headlines.

An almost certain execution in 2004 was commuted to probable long-term occupancy of death-row - at least until 2010 according to the managements of the parent and Australian companies, largely as a result of intervention by the South Australian government all the way to Tokyo.

Apart from buyer reaction to the Mitsu headlines - and facts - the company's Magna and Verada models were uglified in a so-called facelift featuring the company's new corporate front by French design chief Olivier Boulay. A company already deeply in the mire did not need this, and Australian buyers made it clear that they did not either.

Mitsubishi pins its dreams on desperate measures such as a new 10-year warranty and promises of life with the next generation Magna - almost certainly with a rewind of an old name like Galant or Diamente - due before the end of 2005.

It seems inevitable that the song will soon be 'And then there were three'. This will be down from five in 1992, when Nissan pulled the plug on manufacture at its state-of-the-art facility, which was turning out desperately dull product, at Clayton near Melbourne.

After taking a massive sales knock in the wake of this move, Nissan has struggled back gamely. It overtook Mitsubishi in sales in 2004. And product-driven Mazda seemed almost certain to relegate Mitsu to sixth spot in 2005.

That said, there is little prospect of Toyota, Ford or Holden (General Motors) baling out or indeed, going by their current performances, needing to.

The road is not all clearway, but history and Australian perversity suggest their survival is a likely outcome.