• Apr 14, 2009
Clive Matthew-Wilson, editor of Australia's Dog & Lemon Guide, says there's no way around a central fact of Australian automobile production: "Australia's car factories are losing money on every vehicle they make." Because of that, he believes that there is no future for the domestic car industry Down Under, no matter how much money the government provides to keep factories open.

Matthew-Wilson further believes that General Motors' Holden division will be the first brand thrown into the abyss, trailed closely by Ford. The economics of Australian auto manufacturing, as far as he's concerned, simply don't make sense and GM and Ford's cash drain will force them to shut down their operations there.

''Globally, there's a glut of new cars at bargain prices," he says, "yet Australia, which produces a small number of high cost cars, is trying to compete with countries like China.... The Australian car industry can re-focus on small cars, green cars, blue cars or red cars. None of this will make the slightest difference."

For its part, Holden recently cut production nearly by half, and rumblings are that it, like Saab and Opel and HUMMER, it may soon be looking for a buyer.

[Source: Sydney Morning Herald via Carscoop]


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    • 1 Second Ago
  • 33 Comments
      • 5 Years Ago
      Americans have largely been placated by the Japanese and Koreans because a large number of their products are assembled in the United States.

      I am uncertain if Americans would be willing to buy from a company that manufactures exclusively in China, but I'm fairly certain they would assuming that cost is much, much cheaper.

      I will tell you right now that older folks aren't going to buy the Chinese products that first come out. It'll be the new, younger generation, because today's vehicles are too expensive for them to afford. I've not yet seen a brand-new, well-done vehicle in the U.S. today that can be had for under $15K. Even good cars like the Fit retail for around $15K base, and that's for one with a manual. Many of the people I know in my generation can't even drive a manual in the first place.

      CHAMCO was a wake-up call. There was no way it was going to succeed but their desire to bring a compact truck--with crew cab, at $13K, when most American crew-cab compact trucks retail for $20K base--that was a huge broadside. The Chinese expect that they're going to be able to convince Americans, Europeans and Australians to buy their vehicles at Third World prices, and if they succeed the rest of the world is going to cower.
      • 5 Years Ago
      Silly Australians, no one buys cars on the moon.
      • 5 Years Ago
      BTW, the only real way out of our mess is actually to hope China's economy keeps growing. Because as more and more people in China get richer and richer, they're almost guaranteed to end up importing more goods from us than to us just because they'll have 1.5 billion consumers for us to sell to.

      Even if only half of China's population ever makes it to a middle class level of spending power, that'd still be twice as many people as the entire population of the United States. That's the key to keeping our own economy healthy-selling those people 750 million copies of Microsoft Windows, or 750 million copies of Microsoft Office, or thousands of Boeing jets so they can go on vacations and visit their families, or billions of prescription pills from US pharmaceutical companies so they can get or stay healthy, or billions of movie tickets to go see Hollywood-made movies for entertainment, or American-made video games for fun (American-made video games like World of Warcraft or Starcraft sell tens of millions of dollars each in China already...imagine if more Chinese people had money and computers).

      If we manage to do that we'll be insanely rich, because there's so many more people in China to sell to than here. It's ridiculous how nearsighted how the commenters here are-why the hell do you think we WANTED China to join the WTO? We practically strong armed everyone else into letting them join because we'd end up making tons of money once China's economy bloomed, and now you want us to piss off China and get kicked out of what is guaranteed to be the biggest consumer market in the world? It's this kind of short-sighted thinking that gets America into trouble-let's all pile into mortgages cuz the variable interest rate is cheap now, or let's only focus on building SUVs and trucks and let our best selling cars go without real improvements for a decade. For once just try to use your brain and think about 10 years from now instead of doing impatient and drastic schizophrenic crap every 10 minutes. And it's pretty obvious that in the long term you want to have a really good trade agreement with China that'll let you sell them tons of stuff at a super-low tax rate, because any country that doesn't is going to lose big time compared to any country that does.
      • 5 Years Ago
      And here's a fine example of what happens when you try to "protect the United States" and "stop China":
      http://www.nytimes.com/2009/04/02/science/space/02export.html


      The new regulations quickly hurt American satellite makers. Boeing lost a $450 million order. Canadian firms pulled out of at least four projects.
      In June 2000, William A. Reinsch, then an under secretary of commerce, told the Senate that, from 1998 to 1999, satellite export sales had fallen by 40 percent. The drop, Mr. Reinsch said, harms "the high-tech industries upon which our military and intelligence agencies depend."

      The decline accelerated as other countries, driven by pride and the allure of profits, joined the business. Around 2002, Alcatel Space, based in France, started building communication satellites free of American parts and thus free of American export restrictions. It soon landed a $145 million order from China. Other satellite makers joined the de-Americanizing trend.

      The "anachronistic restrictions," Manmohan Singh, India’s prime minister, told his nation’s space scientists, have "spurred you to greater heights." India now has many communications satellites in orbit, and a science probe circling the Moon.

      In 2003 — as American satellite exports fell to $215 million from $1.05 billion in 1998 — the Commerce Department reported that the nation’s annual balance of trade in high technology goods had declined for the first time. Hughes, the satellite pioneer (now a unit of Boeing), had 11 commercial satellite orders in 1998 and none in 2007, according to Futron, an aerospace consulting firm in Washington.


      Wow, what a shock that being cut off to the Chinese market resulted in 1) China buying the same stuff anyway from other people, 2) More competitors for our own countries since it makes sense for them to build things themselves without us competing, 3) Our industries crumbling because there isn't enough internal domestic demand to sustain them without exports to China.

      Raising our import taxes on China and getting the reciprocal taxes applied to our companies will do that to every single last export industry in the United States. By default you're just making European, Indian, and Japanese companies more competitive than American ones. VW would *LOVE* it if you slapped a $10,000 tax on Chinese cars, because the $10,000 tax China would slap on American cars would skyrocket VW's sales in China. As would every single company in Western Europe and Japan.

      I find it utterly hilarious that you guys think that these idiotic ideas would actually help the United States when you're essentially asking for a death warrant on all our industries.
      • 5 Years Ago
      Holden's media release was right on the mark (Thanks Lee). The comment was a publicity stunt for a very poor quality (and struggling magazine). The author of the magazine article also fails to take into account difficulties with exchange rates. A number of attempts to import Chinese vehicles to Australia have failed because highly volatile currency exchange rates make the vehicles uncompetitive. Japanese and Euro makers have been able to withstand this currency variability as the vehicles sell on design and quality. Whilst the Chinese rely only on price they can't succeed (in the unique Australian market at least)
      • 5 Years Ago
      I suggest all you nitwits actually go look at US exports to China before making rather idiotic suggestions about cutting off trade with China.
      Here's a clue: They have a booming economy which needs imports of goods to keep growing.

      So you guys are essentially suggesting that US manufacturers be cut off from the only major growing economy in the world...during a recession in which nobody is buying their stuff at home. Yes, getting the big 3 kicked out of China (or reciprocally taxed) is going to do wonders for the US auto industry. Getting Boeing kicked out of China (or again, taxed to death) is just going to give Airbus more sales and ruin US industry even further.

      So if you still want to go tax that $10 coffee maker from China so that it's $20, just keep in mind that China will just tax that 230 million dollar 747 at 100% also, and the only thing that'll happen is that Airbus will be selling a lot more airplanes to China.

      We're not buying our own products right now, and you idiots are suggesting that we piss off the only people buying our stuff to "save" our economy?

      http://www.uschina.org/public/documents/2006/06/us-state-exports-china.pdf
      http://www.uschina.org/public/documents/2008/03/exports.html

      Go look at that chart you idiots, it only goes to 2005, and then the 2nd link shows 2007. And the numbers keep going up. Our exports to China are growing a LOT faster than their exports to us-the entire f'ing reason why we've agreed to all these years of low taxes-so that we'd end up making obscene money when Chinese businesses and consumers finally had money to spend.

      Those numbers don't even count all the profits that US companies bring back home without exporting anything-the GM cars made in China help GM's bottom line, just like Dell computers made and sold in China still help Dell's bottom line.

      If you idiots manage to get our companies booted out of the most profitable marketplace that'll exist in the 21st century, then I guess we can all look forward to a future where China will still be rich (their exports to the US are only a few percent of their economy, it's a lot of money but their economy is now so massive they don't need us-and Japan is their largest trading parter), except all their stuff will be imported from Europe and Japan instead of the USA, all the brands in China will be European and Japanese brands, and the US has been reduced to a country in which it not only has no industries left to make consumer goods for it's own citizens, it'll have no industries left at all.
      • 5 Years Ago
      Tell that to the germans - who make ALL of the high end, desirable nameplates. Australia could be a force, but it can't built crap. GM and the rest better wake up to that fact. You can't compete with china when it comes to cars for the masses, so you better refocus on higher end cars and lead with technology they don't have. Same way our military leads, they have more men- but we have the high tech goodies to stomp there ass.

      This is common sense people.

      What would help is if all you dumb idiots who keep buying hyundais and kias start showing some pride and help out your fellow countrymen - that's what being an American or Australian or any other -"an" is about.

      The citizens of each of these countries has done it to itself.

      Still think globalism is the way to go? Its not for the little guy, only helps the big corporations.

      A country should drill for its own energy, build its own products, and buy its own products. You can't have one system with a certain standard of living and wages expected competing with another that can exist on lower wages. It doesn't work.

      Either level the playing field or stop trading. Its the only way.
      • 5 Years Ago
      The wider consequences are these, one physical manufacturing will stop in Australia, there will be no one to lobby the government, which will promote MPG increases. The government won't care who will win the MPG war, because no one is building in Australia.

      I think GM and Ford should stop ASAP of production in Australia and just import what we have in USA.
        • 5 Years Ago
        Import from Europe, not from the US. The Ford imports are nice, Mondeo and Focus... and people are climbing all over the new "Festy" at dealerships though I haven't been around in one yet. Holden's smaller cars are rebadged Daewoos, no thanks.

        I haven't driven any US RWDs but reading the great reviews the G8 got over there, and knowing how much better the Falcon is than the Commodore, I think whatever would come from the US will be a struggle to sell compared to the Falcon and Commodore.
      • 5 Years Ago
      Well Australian car industry, you had a good run. A damn good run. C'est la vie.
      • 5 Years Ago
      As much as I hate to say it, he's got a point. It's a GD shame.
      • 5 Years Ago
      The Dog and Lemon guide has been predicting the local car industries demise since it's inception.

      I say the Australian government buy GM Holden and sell it back a year or so later to the Australia public. With the support Holden have in Australia and New Zealand it will make a profit.
      • 5 Years Ago
      From Holden

      This genuinely sincere statement is far more profound than we have come to expect from a media release, which is why we have decided to reproduce it here verbatim.

      STATEMENT IN RESPONSE TO AUTO INDUSTRY SPECULATION

      What gives one person the right to call ‘time’ on an entire industry with more than 60,000 jobs at stake? What data is he basing his views on when happily sounding the death knell for Australian car makers and employees?

      We’ve never had a request from this individual to speak with our executives, to discuss our company business plans or review the business case for our new fuel efficient 4 cylinder small car.

      This is shameless self-promotion at the expense of our industry, our organisation and our employees.

      For the record, Holden has had the best selling car in the country for 13 consecutive years and we’re not going anywhere. We’re in there fighting in a pretty tough global environment and we won’t be discouraged by bystanders.

      Background

      Automotive manufacturing is the largest manufacturing sector in Australia. It supports about 64,000 families and puts $5 billion in wages back into the economy each year. Holden contributed $500 million in wages last year and invested $420 million in research and development.

      Holden recently announced that it will produce a second car line based on General Motors’ global Delta small car platform. GM’s own viability plan highlighted that the introduction of the second car line puts Holden in a long term viable position.

      We believe that the Australian Government’s recently announced $6.2 billion industry support package will be a driver for innovation at Holden and other Australian manufacturers across the next decade.

      Holden and the Australian automotive industry have a lot to be proud of. It’s worth fighting for.

      END OF RELEASE
        • 5 Years Ago
        Nah, it's Daewoo that is making Holdens.
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