Is the Australian car manufacturing industry doomed?

Is the Australian car manufacturing industry doomed?

Holden Commodore SS Sportwagon rq

Is the Australian car manufacturing industry going to the dingoes? An industry analyst has predicted Holden will be the first to go, and that no amount of Australian government intervention will reverse the steep decline in new car sales coupled with the fact that Australian manufacturers lose money on every car they produce.

Holden has recently halved production at its South Australian plant from 600 to around 310. If Holden goes, so could Ford (another big victim of the credit crunch), and ultimately Toyota. But is it a correct assumption?

It certainly isn’t anything new – Car and SUV reported months ago that the bailouts from the US government would force Ford and GM to look at consolidating operations. But, Holden has a weapon: the Commodore. It is very successful in the Middle East, and America has adopted it in the form of the Pontiac G8. Ford America has not adopted the Falcon (which, arguably, is a slightly better car).

While we think that Holden and Ford (and perhaps Toyota) will be around for quite some time in Australia, here are some of the influencing factors so you can decide for yourself:
For

GM is too broke to develop a new rear-wheel-drive platform, so the Zeta platform that underpins the Camaro and Commodore could see active service for 10 years.

The global exposure to V8 Supercars will surely keep at least FPV and HSV in business, even if they become niche manufacturers.

Australians thrive on the competition between Ford and Holden. GM may retrench, but it would still need to badge its cars Holden to have credibility, or it will lose sales to other manufacturers

And therefore, branding: Ford has the advantage as there’s no difference in name between Ford overseas and Ford in Australia; Holden has a lot of brand equity in Oz – is would be expensive (and potentially damaging to its value) to just ditch Holden. And who would want to buy it?

Exchange rates will make European cars relatively more expensive than domestically produced cars
Against

Car sales have hit an 8-year low and there’s a glut of new cars and near-new cars on the market at knock-down prices.

Australian car manufacturers are losing money on cars they produce

China could pose a threat in terms of manufacturing capability – it pays its workers pitifully

US government bailouts may come with conditions to remove unprofitable centres – this might be especially true of GM which is teetering on declaring bankruptcy so it can restructure

Holden Commodore SS Sportwagon rq

Is the Australian car manufacturing industry going to the dingoes? An industry analyst has predicted Holden will be the first to go, and that no amount of Australian government intervention will reverse the steep decline in new car sales coupled with the fact that Australian manufacturers lose money on every car they produce.

Holden has recently halved production at its South Australian plant from 600 to around 310. If Holden goes, so could Ford (another big victim of the credit crunch), and ultimately Toyota. But is it a correct assumption?

It certainly isn’t anything new – Car and SUV reported months ago that the bailouts from the US government would force Ford and GM to look at consolidating operations. But, Holden has a weapon: the Commodore. It is very successful in the Middle East, and America has adopted it in the form of the Pontiac G8. Ford America has not adopted the Falcon (which, arguably, is a slightly better car).

While we think that Holden and Ford (and perhaps Toyota) will be around for quite some time in Australia, here are some of the influencing factors so you can decide for yourself:
For

GM is too broke to develop a new rear-wheel-drive platform, so the Zeta platform that underpins the Camaro and Commodore could see active service for 10 years.

The global exposure to V8 Supercars will surely keep at least FPV and HSV in business, even if they become niche manufacturers.

Australians thrive on the competition between Ford and Holden. GM may retrench, but it would still need to badge its cars Holden to have credibility, or it will lose sales to other manufacturers

And therefore, branding: Ford has the advantage as there’s no difference in name between Ford overseas and Ford in Australia; Holden has a lot of brand equity in Oz – is would be expensive (and potentially damaging to its value) to just ditch Holden. And who would want to buy it?

Exchange rates will make European cars relatively more expensive than domestically produced cars
Against

Car sales have hit an 8-year low and there’s a glut of new cars and near-new cars on the market at knock-down prices.

Australian car manufacturers are losing money on cars they produce

China could pose a threat in terms of manufacturing capability – it pays its workers pitifully

US government bailouts may come with conditions to remove unprofitable centres – this might be especially true of GM which is teetering on declaring bankruptcy so it can restructure

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