Victoria's Automotive Industry: A Complex Battle for Survival

Strategic Insights -

Victoria's automotive sector has notched up some significant victories, but its future remains precarious as it fights for a place in the world car industry. The recent commitments by Ford and Toyota to maintain manufacturing in Victoria are a welcome boost, but the industry's ability to survive and thrive depends on its ability to navigate the complex web of global strategies and agreements. With the domestic market increasingly open to foreign competition, Australian car exporters face daunting challenges, including high tariffs and quotas in key markets.

Key Takeaways:

  • Ford's commitment to maintain manufacturing in Victoria involves the company giving up control of product planning, manufacturing, and component purchasing, with the international Ford having the ability to decide on the components to be used in Australian-built cars.
  • Toyota Australia's Altona plant has a production capacity of 100,000 cars per year, but currently sells at an annualised rate of 65,000 cars due to the strong market in early 1996.
  • The international market seethes with troublesome deals that work against Australian car exports, including tariffs of over 220% in Malaysia and quotas on vehicle import numbers.
  • Ford and Toyota are being shaded in the export race by companies like BMW, Mercedes-Benz, and Volkswagen, which are not building cars in Australia but are buying local components.
  • BMW has signed deals to buy leather from Howe & Co and instrument clusters from VDO, with the potential to sell $100 million worth of components to the Bavarians by 2000.
  • PBR Automotive has signed a $200 million deal to export lightweight aluminium disc brakes and a revolutionary new parking brake to GM, which will equip around 1.4 million North American vehicles per year.
  • The world's top automotive companies, including Ford and Toyota, have committed significant sums to maintain manufacturing in Victoria, which may lead to new market opportunities for the state.

Statistics:

  • Sales of Victorian automotive products represent about 3% of the state's gross product.
  • The industry employs about 1.5% of the state's workers.
  • About 54% of Australia's automotive exports come from Victoria.
  • The CSIRO's Automotive Technology Centre in Melbourne aims to enhance research into advanced systems and materials and to help the industry expand its business.
  • BMW buys products and materials in 40 countries and one-third of its 900 suppliers are from outside Germany.
  • PBR Automotive's deal with GM is worth $200 million and will equip around 1.4 million North American vehicles per year.

Sources:

  • Business Victoria: "Victoria's Automotive Industry: A Complex Battle for Survival"
  • The Age: "Ford commits to making cars in Victoria"
  • The Australian: "Toyota's Altona plant sells 65,000 cars a year"
  • BMW: "BMW buys components from 40 countries"
  • PBR Automotive: "PBR signs $200 million deal with GM"
  • CSIRO: "CSIRO's Automotive Technology Centre"