By on January 12, 2012

Ford’s Australia branch is getting $34 million AUD (roughly $35 million U.S. dollars) plus an unspecified contribution from the government of Victoria (an Australian state), to sustain a Ford plant in Melbourne.  Total investment is said to be roughly $105 million USD. Holden, GM’s Australian division, is looking for some government funds too, and its raising questions about the viability of Australia’s domestic car industry.

Holden has been negotiating for their own package, would help develop a new Commodore. More significantly is the fact that some money would be earmarked to help develop a next-generation Holden Cruze (nearly identical to our Chevrolet version), currently the sole small, fuel-efficient car produced in Australia. While Australian cars are generally thought of as being large, V8 powered brutes, consumer tastes have been shifting towards cars like the Cruze, which was Australia’s 5th best-selling car. The Mazda3 also unseated the Commodore as Australia’s best-selling car for the first time in 15 years.

In 2008, Mitsubishi closed up shop after getting government assistance to produce the 380 (similar to our Galant) . Production lasted a mere three years, even though the 380 was supposed to be the begging of a turnaround for Mitsubishi’s Australian operations. The 380’s failure has cast a shadow on Australian vehicle production ever since, and more importantly, advanced a notion among some that continued bailout money merely prolongs the natural death of a financially unsustainable plant or vehicle.

Of course, the deal has strings attached – some of the money must go towards making the Falcon, and the Ford Territory SUV, safer and more fuel efficient. While the Australian government hasn’t exactly told Ford that it needs to “build a 40 mpg car“, we’ve seen shades of this before at home. The Falcon and Territory are under specific threat due to Alan Mulally’s  “One Ford” doctrine which demands global variants of vehicles rather than market-specific product.

One analyst pegs the amount of government money pumped into the local industry at about $500 million per year since 2001, in a program that is supposed to run until 2020. One opposition politician even suggested that the car industry in Australia couldn’t survive without government assistance. Compared to America, the culture of government assistance seems much more deeply entrenched, and opinion is starting to shift towards the view that a perpetual appetite for taxpayer funds, especially for an industry that produces increasingly irrelevant vehicles (anecdotal evidence suggests that most Commodores, Falcons etc are bought by government and private fleets) and exports little is becoming unsustainable.

 

 

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56 Comments on “Ford Australia Secures Government Money, Raises Questions About Industry’s Future In Australia...”


  • avatar
    carguy

    While its great news that the legendary Aussie RWD Falcon lives on, the platform is getting old and is in serious need of an update. Like the Panther platform, there is a lot of love but its hard to see it continue beyond 2016 given the modest sales and rising gas prices.

    • 0 avatar
      Robert Gordon

      The concept of a platform is meaningless. There is nothing particularly archaic about any of the Falcon components, except perhaps that straight six engines are these days an unusal configuration. The suspension is a sophisticated as anything out there for instance.

    • 0 avatar
      Athos Nobile

      You can’t compare the FG to the Panther. Even an AU would give a Panther a run for the money.

      And the Falcons are much much nicer than even the latest Panthers.

    • 0 avatar
      jeffzekas

      Folks here are ignoring the obvious: without a domestic automobile industry, Oz will become a colony of the manufacturing countries… which is why China has spent BILLIONS of yuan subsidizing its own auto and steel industries.

      Also, WHEN (not if) the next world war occurs, the countries which have auto manufacturing facilities will have the ability to ALSO produce large numbers of tanks, missiles and fighter aircraft… Whereas, nations lacking auto plants (or heavy manufacturing) will quickly run out of spare parts and materiel, leading to early defeat.

      Always, the key to fighting (and winning) a war is having a large, adaptable industrial base… which is why tariffs which protect those industries are good… assuming national survival precedes short-term industrial profits.

  • avatar
    Pch101

    One correction: The state is Victoria. (Ford Australia operates its plant there. Holden is in South Australia, a different state.)

    Australia has a long history of protectionism, including tariffs and top-down government planning to reduce costs by imposing badge engineering arrangements on the industry. These types of practices are being phased out.

    Combine the decline of protectionism, the globalization of the industry and the increasing irrelevance of the Falcon and Commodore with an overinflated Aussie dollar, and you end up with a problem for their domestic car industry. It’s a matter of time before they either radically change or disappear altogether.

    • 0 avatar

      My fault on the typo. My friends and cousins living there would surely give me hell if they saw.

    • 0 avatar
      Athos Nobile

      Ford has 2 plants here in Victoria. Holden has a factory here in Melbourne too, for the HFV6. The cars are made in SA as you mentioned.

      There are barely any tariffs imposed on imported cars (IIRC it’s around 3%) and the LCT is applied to ALL vehicles after $57K something. The badge engineering is a thing of the past, like 20+ years ago.

      The possible export markets have “closed” their doors due to the high currency or imposed tariffs (Thailand).

      Add to that that most of the media sees the industry as a “dinosaur” (click here to read Deveroux’s speech about this http://www.carpoint.com.au/news/2011/ford/holdens-devereux-addresses-national-press-club-27977), that the cars themselves are perceived by the euro-snobs as “bogan mobiles”, that they are also thought to be “guzzlers” when they’re not, that barely any car in the market breaks the 30K units mark (there are too many brands fighting for the cake) and you start getting an idea of the problem there’s here.

      People here is switching to either C-segment cars or SUVs. Ford is well positioned in the latter market with their Territory, Holden did a good move when they brought the Cruze AND designed the hatchback version.

      Both Commodore and Falcon provide a mix of value for the money that no import is able to match down here, a bit less the same goes for the Camry/Aurion.

      I personally got last week a 97 VT Calais. And I can tell you that is far nicer than the Japanese cars I had before and surprisingly efficient (it weights around 2T) with the 3800 V6. And will continue buying local whenever I can (applies to any kind of product BTW)

      • 0 avatar
        Pch101

        There are barely any tariffs imposed on imported cars

        That’s true now. But back in the 80s, there were import quotas, plus the tariffs hit a peak rate of 57%.

        http://www.abs.gov.au/ausstats/abs@.nsf/Previousproducts/1301.0Feature%20Article252005?opendocument&tabname=Summary&prodno=1301.0&issue=2005&num=&view=

        Then there was the badge engineering Button car plan, which lasted through the mid-90s.

        It takes awhile for these things to catch up. Those sorts of programs helped to prop up the local industry for a time, but that seems to be fading. With the Aussie dollar at parity with the US dollar, a substantial export market is pretty much out of the question, and the Antipodes just aren’t big enough to be worthy of much of an investment.

      • 0 avatar
        tresmonos

        I laid awake at night thinking about the Falcon after it’s most recent refresh. At the time, Ford was just getting through it’s first verification build of the 2010 Taurus (which was ground breaking for North America) but I kept thinking how the AU had it right. I had convinced myself your country had progressive people who knew the value of a good looking, driver’s car. Athos, your comment has almost dashed my faith in humanity. The Falcon kind of got me through some tough times (lay offs) while working on the Taurus. I think it could have been a great platform for a Lincoln variant.

      • 0 avatar
        Athos Nobile

        @tresmonos

        “Athos, your comment has almost dashed my faith in humanity”

        Como asi viejo?

      • 0 avatar
        tresmonos

        Add to that that most of the media sees the industry as a “dinosaur” (click here to read Deveroux’s speech about this http://www.carpoint.com.au/news/2011/ford/holdens-devereux-addresses-national-press-club-27977), that the cars themselves are perceived by the euro-snobs as “bogan mobiles”, that they are also thought to be “guzzlers”

        That part. I should have been more specific. (at the time, I thought the car was well received)

        All that aside, I am glad Mulally agrees that the Falcon should live on in RWD form.

      • 0 avatar
        Athos Nobile

        @tresmonos

        I am an expat down here. Don’t be harsh on them, this is good people.

  • avatar
    ott

    No matter how hard I try, I just can’t spot the difference between these two pics…

  • avatar
    Zackman

    Hmmm…concerning the green car pictured – so that’s what a 1997 four-door Mustang would look like – with a 1995 Lumina greenhouse, huh?

    “for an industry that produces increasingly irrelevant vehicles”

    Well, how many industries are guilty of this? In a more perfect world with unlimited funding, region-specific vehicle design is nice, but this isn’t the old days anymore and due to globalization – demon it may be – industry needs to rationalize their platforms and utilize the most appropriate ones for sheer economy of scale, if nothing else.

    • 0 avatar
      Bryce

      V8 super car race rule seem to demand the roof profile be identical so no aero advantage has to be adressed for performance parity that roof came out in 99 and a decent FPV Falcon will blow the doors off a Mustang. Ford could export these but the Ford mothership forbids it Americans dont want powerful RWD cars like the Holden GTO G8 or the Falcon.

      • 0 avatar
        ott

        Wha?!? Said WHO?

      • 0 avatar
        Robert.Walter

        Having to engineer and develop a LHD variant for a niche N.A. market segment would hardly be efficient or profitable.

        Until Alan leaves, don’t expect such silliness to happen.

      • 0 avatar
        st1100boy

        An FPV Falcon may be faster than a new Mustang GT, but not by too much. And for the extra cash, that Falcon had better be faster. A lot faster.

      • 0 avatar
        Pch101

        Having to engineer and develop a LHD variant for a niche N.A. market segment would hardly be efficient or profitable.

        The width of a Falcon is almost the same as a Mustang, and the wheelbase is only about four inches longer.

        If I was serious about keeping it, then I would find a way to build both of those on related platforms. In Europe, I would slot a version of the Falcon above the Mondeo that targets the executive saloon market, while in the US, I would use the sedan as the basis for a Lincoln (although hopefully free of those gaudy Lincoln design cues.)

        Then again, I’m pretty sure that I’m not on Mulally’s speed dial, so I wouldn’t necessarily count on any of that…

      • 0 avatar
        outback_ute

        @ st1100boy – price comparison is irrelevant, same cost as a GT would get you a base model Audi A4. On the other hand a new Mustang in Australia will cost you $120k+, after import costs & conversion to RHD.

      • 0 avatar
        CJinSD

        Pch101,

        GM and Ford abandoned the European executive market some time ago. They used to have cars like the Opel Senator and Ford Scorpio that were comparable in size and power to their contemporary 5 series BMWs, Audi 100s, Mercedes W123s and W124s, but eventually they gave up looking for big car buyers that weren’t status seekers. GM even killed their slightly smaller Omega, which was sold here as the Cadillac Catera. The biggest GM of Europe car is now the Insignia, which evolved from the Vectra, which replaced the Ascona J-car. That means the new Buick Regal indirectly evolved from the Cavalier, showing that size creep doesn’t just happen to cars that are popular in the US. The Mondeo is now the biggest Ford, which replaced the Sierra, which replaced the Cortina, which started out as a postage stamp sized econobox that weighed 1,700 lbs and had a 1.2 liter engine.

        Other European manufacturers have also given up on competing with the premium brands in the large car segment, with Citroen and Peugeot pulling the plug on their XM and 607. Renault has a version of the Nissan Altima, and VW still sells the Passat, but it seems doubtful that other mass marketers will bother developing large cars for Europe.

      • 0 avatar
        APaGttH

        The GTO was built on the Monaro platform.

        The G8 was built on the Commodore platform.

        The cars share certain parts, but not a whole lot.

        The GTO started with an LS1 and then when to an LS2.

        The G8 has an all aluminum Australian spec L76 (LS2 block, L92 heads, LS3 throttle body and intake manifolds, all aluminum with AFM) in two configurations 361 HP and 355 HP, the reduction was due to much larger catalytic converters being put on 2009 “9L3″ cars – same reason why the Caprice PPV is rated for 355 HP. The optional V8 was the LS3

        Sadly the G8 was a case of too little too late, and a bit of anti-GM bias Pontiac excitement. By the time the enthusiast market figured out that the G8 was for real Pontiac was already dead. Look at the price of used G8’s today, now three years old, you’re hard pressed to even find a CPO V6 stripped based model for under $20K today. Those cars sold for $27K three years ago.

        The biggest barrier right now to Ozzie imports to the United States is the strength of the AU dollar versus the US dollar. Export costs are a big issue, and it’s killing Holden.

    • 0 avatar
      Athos Nobile

      Ford could have based the Mustang on this car, it already has all the goods in place: double A-arm suspension and IRS. It also can be “dressed” as an SUV, which would have solved the Explorer matter. Then it would have made a terrific “Police Interceptor”.

      Adding those 3 models alone they could have used this car as the basis for around 300K-400K units per year.

      But for whatever reason they choose not to.

      @PCH101, a RWD car like the Falcon is a non-starter in Europe with a Ford badge on the grille. Both Ford and Opel left that market years ago.

      • 0 avatar
        Pch101

        It also can be “dressed” as an SUV, which would have solved the Explorer matter.

        The Explorer shares a platform with other North American SUVs/CUVs and a Lincoln sedan, all of which have longer wheelbases, so I’m not sure if it would help with that. But it certainly might help with the Mustang if the product cycles can be synched up with the Falcon, as they are closer in size to each another and the Mustang currently has a unique platform.

        As for Europe, I realize that Ford would have a hard slog trying to compete with the Germans, but it could be worth the effort. They would have to up their game in order to have a fighting chance, though.

      • 0 avatar
        outback_ute

        But isn’t the D2/D3 (ie Taurus/Explorer) platform to be phased out? A longer wheelbase is relatively easy to do (the Territory has a shorter wheelbase than Falcon).

        Pch they could try selling a Lincoln in Europe, but I agree with Athos. It is the same reason why the local LWB cars are dead in Australia (Holden still sells the Caprice but tiny numbers), people paying that many $$$ want a prestige badge on the hood.

  • avatar
    geeber

    Wasn’t Ford supposed to produce the new Focus in Australia? Or did that plan fall through?

    • 0 avatar
      Bryce

      Ford NZ werent happy about getting Aussie spec Foci but I dont know if we got any Aussie market cars are very down spec from what we usually get even our Falcons and Commodores have more fruit than the eqivalent OZ models

    • 0 avatar
      carguy

      The resource boom in Australia has sent the Aussie dollar sky high as well as caused generous wage growth. That is not a combination conducive for car exports.

      • 0 avatar
        willem

        Don’t believe the hype.

        The proportion of each non-farm unit produced (of all things produced in the Australian economy, not just cars) which is wages/labour costs has been trending down for several years, profit per unit has been trending up. Mining wages are high but this is only 9% of the overall economy, and the industry is highly mechanised with only a small proportion of the economy’s total number of jobs. Wages in other sectors have been stable (eg in manufacturing, which is bigger than mining).

        Yes the dollar is high which hurts exports, but makes the imported components on Australian manufactured vehicles cheaper. The reason why the dollar is high is to do with global capital looking for relatively stable investment markets, there has been a modest rediretion of money from eurozone economies. Also Australian interest rates are high compared to other countries.

        Robert Walter (above) is correct when he says developing LHD variants of these low volume (on a global sacle) vehicles would be silly.

    • 0 avatar
      TonyJZX

      All companies took money to build ‘greener small cars’… even Toyota took some for their locally designed hybrid Camry (which Toyota obivously didn’t need).

      Ford took some on the proviso that they would build a local Focus but they channelled that money into an LPG, Ecoboost Falcon and Territory and called it a day.

      GM Holden took the money and built a local Cruze assembly line and the Cruze hatch.

      While some people may be surprised about the Ford free money, expect another annoucement soon.

      Holden are crying poor and will ask for government money very soon.

      This is largely because the industry allegedly employs 60,000 people directly and something like 350,000 indirectly so it’s like they are government workers anyway.

      This is probably small beans to any country outside of Australia but its either pay now or pay more when it comes to unemployment.

    • 0 avatar
      Robert Gordon

      The capital expenditure of setting up the plant was too great.

    • 0 avatar
      outback_ute

      They worked out that they wouldn’t make money on the car, same reason why Toyota also decided not to build the Corolla here again. Not sure how much money Holden will make on assembling the Cruze here.

  • avatar
    replica

    Is the falcon based on the SN95 or the S197?

  • avatar
    probert

    Darned that Obama and his socialist agenda. What are the gonna call it? The Ford Pelosi? Newt, Newt is that you? Sorry I gotta go..

  • avatar
    Robert.Walter

    “…the 380 was supposed to be the begging of a turnaround for Mitsubishi’s Australian operations.”

    Unless the above has a typo, it would seem that the 380 was exactly that…

  • avatar
    outback_ute

    I think it is a bit of a non-issue in the context that all countries with auto industries have grants under various guises, or large import tariffs, Australia’s is now only 5%.

    Holden chairman Mike Devereux: “There isn’t a country in the world that actually has an auto industry, an integrated auto industry, that can design, build and sell a car from scratch that doesn’t have one of two things: either large tariff barriers to entry for imports or co-investment….

    … In Australia we have effective tariffs of about 3, 3.5 per cent”
    From: http://www.abc.net.au/news/2012-01-10/governments-to-pay-to-keep-holden-in-australia/3766370

    Does anyone know how much has been given to the US auto industry, excluding the GM bail-out? I’m thinking of things like money given by the Dept of Energy etc.

  • avatar
    acuraandy

    Well, if they’d just export Falcons, Commodores (and Utes!) over here (for close to what the Aussies pay for them, currency adjusted), it would revitalize both GM and Ford’s bottom line for both Holden and Ford Australia, and thus the US as well. Problem solved!

    Yes, I know, Commodore is available in the US (If you are a cop, as a ‘Caprice’. Don’t even get me started on the name).

    Thanks to CAFE standards, this probably won’t happen; despite the fact that Americans ACTUALLY WANT THESE CARS!

    I’d love to see Ford’s REAL excuse for not bringing Falcon to the US with the demise of the Panther.

    Falcon would’ve been a much more suitable replacement for Crown Vic than Taurus ‘Interceptor’. I have yet to see a single one in law enforcement service; most departments around the Twin Cities have hoarded Crown Vics.

    I have however seen one Caprice, in white ‘unmarked’ livery. Too bad ANY car guy could spot it a mile away since it is cop-only, and had conspicuous ‘POLICE’ lic plates. The grille gives it away compared to the late, great Pontiac G8.

    See guys, I used to be a Detroit fanboy! I’d maybe (AND A BIG MAYBE) even give them a shot again if they brought these over to the US (something about $30k+ for a four-year old used G8 GT turns me off…)

    • 0 avatar
      Ooshley

      One big problem with the current Falcon is it’s sitting on a really quite dated platform. The underpinnings have remained largely unchanged since the AU was introduced in 1998. Which itself was not a clean-sheet design a (albeit major) reworking of the E-series introduced in 1988. Also the I6 engine found in the vast majority sold isn’t found anywhere else in the world and only used in one other local model (Territory).

      The Commodore on the other hand got a an entirely new platform 6-years ago and uses engines found all over the GM Empire.

      • 0 avatar
        outback_ute

        That’s not true. The front suspension was changed in 2000 for the AUII, the complete rear structure of the car was changed in 2002 for the BA, then the whole lot was revised including another change to the front suspension for the 2008 FG. It is a common belief that the FG was just a facelifted B-series but there are only a couple of small stampings that were not changed.

      • 0 avatar
        Ben

        The current Falcon is actually a great drive – WHEELS magazine in Oz rates the based model as having a better ride / handling balance than the current 5 series. The problem with the current car is in the interior – the rear is hard to get in / out of, and the driver’s seat is too high.

      • 0 avatar
        Athos Nobile

        @Ben

        “the rear is hard to get in / out of, and the driver’s seat is too high”

        Have you sat in one? The Falcon is the de facto taxi down here. No issues getting in or out of the back seat, on an BA/BF. The FG has even larger doors.

        While looking for a car I sat in a FG XR6. The front seat height was also normal.

      • 0 avatar
        Ben

        @Athos Nobile – I spend around $500 a month on cabs in Sydney and Melbourne, so I get plenty of practice hopping in and out of either side. The rear footwell is tight for my size 10s, and I don’t have the same problem when I get the rare Commodore or Prius cab.

        As for the driver’s seat, it feels like you are sitting on top of it and is exaggerated by the reach it requires to the shifter, as opposed to the Commodore in which you sit more snugly.

      • 0 avatar
        Ooshley

        @outback_ute
        Revision upon revision upon revision going back over 20 years. There may not be one part the same from back then but the compromises are inherent along the way. One BIG one being its perennial weight problem. Sometimes you just need a clean sheet of paper to truly progress.

        @Ben
        Wheels, like most mags, is morally and ethically bankrupt. They give ‘Car of the Year’ to whatever major local release came out almost without fail. I do believe BMW and their ilk are over-rated (and certainly over-priced) in this country but that is a hard one to swallow.

      • 0 avatar
        outback_ute

        @Ooshley – true, a clean sheet gives you more options, but the FG weighs roughly the same as a BMW F10 5-series (not sure that is a good thing…), the main difference is the weight of the cast iron engine block vs the BMW’s magnesium, the new Ecoboost Falcon will be about the same weight as base model 5-series. The FPV GT is 200lb lighter than an M5, both forced-induction V8’s.

    • 0 avatar
      Pch101

      despite the fact that Americans ACTUALLY WANT THESE CARS!

      I seriously doubt that many of them do. The mainstream sedan market is dominated by the Camry and Accord, most of which are equipped with relatively large 4-cylinder engines.

      Car guys in America have to accept that the market has moved toward trucks, CUVs and SUVs. In terms of volume, car sales have basically been flat for 20+ years. All of the additional volume has been added in the light truck segments.

      But I could see a small market for them, positioned upmarket at luxury car volumes and with relatively high prices. Since they can’t sell very many of them, what they do sell needs to pushed with high prices. They would need to target the Germans, and equip and trim them accordingly.

      • 0 avatar
        outback_ute

        While there were some unfortunate circumstances the experience of the Pontiac G8 bears this out. The Falcon is about to be launced with the 2.0 Ecoboost engine, which would slot right into the Camcord market but it is rwd only (as a sedan) so automatically loses consideration from many.

        I also agree on the upmarket side of things – standard Coyote engine, or supercharged, rework it as a Lincoln. A minor sheetmetal facelift would see it echo the styling trends of the MKZ concept with the exception of the roof line as that would be too costly to change – unless they were doing a lwb version…

      • 0 avatar
        Xeranar

        Pch101 is spot on, the reality is that the large V8 market is dwindling and the people who can afford cars that come equipped want smaller displacement V8s from the Teutons. Australia’s car culture is very similar to America’s rust-belt/midwest perception and the reality is a small portion of sales happen there, the vast majority of the money for the industry is on the coast, selling Accords, Camrys, Fusions, and Passats (apparently…). I would much rather see the domestics challenge the C & B segments with seriously updated engines that use turbocharging for the much-needed oompf. Even now the Koreans are storming the mid-sized segment with turbocharged cars that aren’t necessarily sporty but certainly don’t stand still and certainly crunch the Accord and Camry off the line at stoplights.

      • 0 avatar
        APaGttH

        In Australia you can get a Commodore with a 3.0L V6, and you can get them from the factor to run on CNG in a dual fuel configuration of CNG or gasoline – just flip a switch. The equivalent of what was a Pontiac G8 is over $50K in Australian dollars when equipped with a V8, around $35K Australian in the smaller V6 configuration. No idea what the CNG/gas dual use version stickers at.

        I do think that Chevrolet should not be bringing the new Colorado to the states (thank you UAW – NOT!) and instead bring the Holden Ute here as an El Camino with three engine options. A small fuel efficient V6 or turbo four, the GM 3.6L V6 in a 300HPish configuration and an LS3 SS model.

      • 0 avatar
        acuraandy

        @Pch, my post was wishful thinking, I had a flashback to when I discovered the big Aussie cars when back in High School.

        I’ll take an ’11 9C1 when Johnny Law starts decommissioning them in a few years. LS3, in black, please :)

      • 0 avatar
        Athos Nobile

        “I’ll take an ’11 9C1 when Johnny Law starts decommissioning them in a few years. LS3, in black, please”

        You will get the nice car, but forget about the LS3 because those have something more in the lines of an LS2… unless you do a swap.

        You should read about the special versions… ;)

      • 0 avatar
        acuraandy

        I stand corrected.

  • avatar
    Bimmer

    Of course Ford won’t bring it here, you can actually see out of this car!


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