The Truth About Cars » Australia The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Tue, 22 Apr 2014 14:37:08 +0000 en-US hourly 1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » Australia Analysis: Australia’s Free Trade Deals Are The Final Nail In The Coffin Of Its Auto Industry Tue, 08 Apr 2014 15:35:19 +0000 holden-plant

In the span of 24 hours, Australia inked two free trade agreements with both Japan and South Korea. Even though Holden, Ford and Toyota had already committed to ending auto manufacturing in Australia, it’s hard not to see the agreements as the last nail in the coffin of Australia’s once strong auto industry.

Although North American perception of Australia’s car market is one composed of big, rear-drive V8 sedans and Utes, that image is largely a construct in the minds of enthusiasts. The real picture is a lot less sexy.

Australia’s market is both unique and remarkably mundane. At around 1 million units annually, Australia’s new car market is a mere fraction of the United States – but it’s also far more competitive, with roughly 60 brands competing for a very small pie.

In past decades, the local auto manufacturing industry was heavily protected by tariffs, which encouraged a thriving domestic auto manufacturing industry. Holden and Ford ruled the roost, while Chrysler enjoyed a brief run of localized cars. Later on, companies like Mitsubishi, Nissan and Toyota joined the fray, establishing themselves as the favored Japanese brands.

But in 1983, the Button Plan radically changed the automotive landscape in Australia. The chief goal of the Button Plan was to consolidate the domestic auto industry by halving the number of model produced, while also looking to reduce tariffs and import quotas. The overall goal was to foster a more competitive, export-focused Australian car industry through increased competition.

In the immediate term, a number of badge engineered domestic models appeared in the showrooms of Japanese brands, but none sold particularly well. For a long time, traditional Australia vehicles like large sedans and Utes reigned supreme. But the past decade has seen a major shift in the automotive market, with rapidly changing tastes.

Much like their cousins in the United States, Australia’s traditional vehicles – large sedans and Utes – are facing a two-fronted war, and the outcome has all but been decided.

A report by Ward’s Auto shows that in 2003, large sedans (which ostensibly includes not just the Holden Commodore and Ford Falcon, but also front-drive entrants from Toyota and Mitsubishi) were the most popular cars in Australia, with 26 percent market share. A decade later, that number has fallen to just 7.6 percent.

Small cars and SUVs have overtaken the large car as the most popular segments in Australia. Rising fuel prices, shifting market tastes and a greater selection of small cars have helped propel vehicles like the Holden Cruze, Mazda3, Hyundai i30 to the top of the sales charts – to say nothing of the Toyota Corolla, which was Australia’s best-selling car in 2013.

At the other end of the spectrum, SUVs, crossovers and mid-size pickup trucks have eroded the large sedan’s domain as the family car of choice, with Ward’s reporting that one fifth of buyers are opting for mid-size or large SUVs. The Toyota HiLux was Australia’s best-selling truck in 2013, as sales of mid-size trucks (including Holden’s popular Colorado) helped dampen enthusiasm for Utes.

Beyond the lack of enthusiasm for traditional vehicles, the importance of Australian pedigree is on the wave. As Ward’s reports, the preference for Australian-made vehicles has declined substantially from over a quarter of new buyers in 2003, to roughly one eighth in 2013. Last year marked the first time that the three most popular brands in monthly sales rankings (Toyota, Mazda, Nissan) were all imports.

With a changing climate regarding imported vehicles, the FTAs with both Japan and South Korea will only reduce the cost of vehicles that Australian consumers are already gravitating to. While the FTA with Thailand arguably served as the catalyst for Australia’s major market shift towards Thai-built trucks and certain passenger cars, other factors, like a strong Australian dollar, high manufacturing costs and limited export demand for Australian cars (despite the protestations of enthusiasts across the internet) did their part in bringing about the inevitable end to Australia’s auto industry. The Japanese and South Korean FTAs won’t do any more harm to an industry on death row. But it’s impossible to ignore their symbolism in the wake of the Australian car industry’s annus horribilis.


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Ellinghaus: Cadillac Could “Easily Flourish” In Australian Market Fri, 14 Mar 2014 10:05:57 +0000 2015 Cadillac ATS Coupe

Sometime in the future, Cadillac global marketing boss Uwe Ellinghaus believes Cadillac could enter the Australian market, being able to “easily flourish” under the proper conditions established on top of the goodwill the brand already has in the country.

Auto Advice reports however the main goal for Cadillac is to go after what Ellinghaus calls “low-hanging fruit” markets:

We see the opportunity [in Australia] and we want to expand into as many markets as we can afford, but it’s also fair to say we have so much growth potential unexploited in China, even in the US, Canada, Russia, Dubai, Mexico… This is the lower-hanging fruit.

We have limited resources and great opportunities elsewhere that we need to make a very careful plan when to enter which market.

Regarding where Cadillac could enter the Australian market, he says the space soon to be vacated by the Holden Commodore would be the perfect point of entry. Offering the brand for Commodore prices, though, would be easier said than done as far as a business case is concerned, pointing toward both the BMW M Series and Mercedes AMG as to where pricing would occur for Cadillac’s high-performance lineup. He also had high hopes for the CTS, and the SRX and Escalade, with the latter two finding huge success in Australian burgeoning SUV marketplace.

As for when Cadillac would enter the scene, Ellinghaus says an introduction would occur near the end of the 2010s at the earliest, and would be headed by one or two models converted to right-hand drive. This follows an near-entry into the market back in 2008 before turning back at the last moment, though not before exporting a few vehicles and appointing dealers to sell them.

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Australians Favoring Imports Over Domestics In Study Mon, 10 Mar 2014 13:35:24 +0000 Mirage (6)

In a study conducted by Roy Morgan Research, one in eight Australian consumers prefer locally made vehicles for their next new-car purchase today, down from one in four a decade earlier.

WardsAuto reports that while cars such as the Holden Commodore, Chevrolet Cruze and Toyota Camry are at the top of the list for Australian-built new vehicle purchases, the overall decline in is due to the kind of vehicles made in Australia, as Roy Morgan Research Automotive Account director Jordan Parks explains:

Over the last 10 years, Australian car-buying preferences have changed substantially – with the small-car market in Australia now clearly the dominant segment. SUVs are also taking share from the once-dominant large-car segment, with more than 20% of buyers now after either a medium or large SUV.

Parks also adds that more options available to Australian consumers, a stronger Australian dollar, and decreasing tariffs also are among the growing number of factors fueling the import boom:

When combining the increase in choice, changing vehicle preferences, higher local labor costs, strong Australia dollar, increasing petrol prices and decreased tariff protection, it is not surprising to see the gradual demise of the locally built large car.

With the end of the local industry coming over the horizon, Parks believes that the tariffs that once protected the industry would all but vanish, allowing new-car prices to fall to more affordable levels as a result of savings of up to $1 billion AUD in annual fees paid by importers.

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GM Korea May Increase Exports To Australia Fri, 07 Mar 2014 17:52:32 +0000 Holden Cruze

As Chevrolet slowly exits from the European market while Holden exits the production line altogether, General Motors is mulling over increasing exports to Australia out of South Korea.

Bloomberg reports the increase in exports is compensation for GM Korea losing as much as 15 percent to 20 percent of its production volume when Chevrolet closes the door on Europe at the end of 2015, and is roughly the same volume needed to fill the showroom floors in Australia while Holden winds down local production — and possibly itself — by 2017.

The Chevrolet experiment ultimately lost General Motors “millions” of dollars according to GM Korea CEO Sergio Rocha, though he expects the Australian market will more than make up for it:

With this money that we call ‘loss avoidance,’ I’m going to have a lot of money in the next couple of years that we can invest in new products to be competitive in the local market and for exports as well.

Meanwhile, GM will focus on Vauxhall and Opel vehicles in their native markets, with Opel also providing select vehicles to the Australian market, beginning with the Cascada convertible.

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Opel Cascada Leading Brand’s Return To Australia Thu, 06 Mar 2014 13:30:41 +0000 Opel_Cascada_Innovation_2.0_BiTurbo_CDTI

Though the local auto industry in Australia is slowly drawing to a close, a few Opels will soon be found in Holden showrooms, beginning with the Cascada convertible.

Carsguide reports Holden dealers were told in a briefing to make room for the convertible on their sales floors, as well as to expect more Opels to arrive in the future. Though nothing more was said about which Opels were to follow, News Corp Australia believes the Astra could be the next in line, sold alongside the locally produced Cruze until the end of all local production in 2017.

The Cascada’s arrival to the Australian market comes after Opel as a brand left the continent in August 2013, where 20 dealerships were folded and 15 office staff based in Melbourne were dismissed due to poor sales; prior to the experiment, Opel sold their cars with Holden badges in the 1990s through the early 2000s.

Opel’s return is part of a strategy by General Motors president and New Zealand native Dan Ammann to reaffirm his employer’s commitment to the Australian market, and to Holden, as he told reporters at the 2014 Geneva Auto Show this week:

We’re going to make sure we bring the product portfolio to the market that the customers really want. The Australian market has evolved a lot… it’s going to come back to how do we best meet their needs.

The Cascada will be sold for $50,000 AUD by the end of 2014.

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TTAC Salutes The Ute On Its 80th Birthday Tue, 25 Feb 2014 22:53:41 +0000 1393336971934
As far as automotive marketing goes, a truck story is always going to appeal to your emotions. More so than any passenger car, truck buyers ask more from their pickups, put them through more strenuous tasks and treat them in a very different way.

It’s fitting, then, that Australia’s Ute has a similarly heart warming story, one that we can all connect with – even if the Ute was never sold here.

In 1933, a poor Australian farmer needed a single vehicle that could “go to church on Sunday and a truck to take the pigs to market on Monday.” He mailed a letter to Hubert French, managing director of the Ford Motor Company of Australia. With this short letter in hand, 23 year old Lewis “Lew” Bradt was tasked with designing something that gave the day-to-day comfort of a sedan, with the utility of a truck. In 1934 Ford’s Ute was born, though christened the “coupe-utility” by Lew.

The main body shell was a Ford Model 40, but from the front doors back a cab wall was added, along with steel bedsides integrated into the body, with a wooden bed floor. This was a new step from the traditional method of a separate body and bed. It helped to maximize the load floor area, while maintaining a compact and streamlined body, by eliminating the extra forward bed ‘wall’ and the gap between the bed and cab of a traditional truck. The Ute spawned a cultural icon for not only Australia, but in the U.S. as well with our El Camino and Ranchero.

Ford would like to credit the little Ute to their success with the F150 and global Ranger, despite its plans to end Australian production of the Ute and its Falcon twin by October of 2016.

So hats off, mullets free to the wind; and thank that thrifty farmer for his modest wish.

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Toyota Australia Engine Plant Moving To Thailand After 2017 Fri, 21 Feb 2014 16:30:37 +0000 Toyota Altona Engine Plant

Sources close to Toyota say the engine plant in Altona, Australia will likely be relocated to Siam Toyota Manufacturing in Thailand once the automaker ceases Australian manufacturing operations in 2017.

GoAuto reports that while the company hasn’t officially announced what will happen to the $331 million AUD engine plant thus far, executives inside Toyota Australia have Thailand in mind as a potential new home for some of the tooling currently in use. The factory exports 16 percent of its 2.5-liter four-cylinder engines to Thailand and Malaysia for fitment in Camry and Camry Hybrid models.

Another reason for the move to Thailand? While Toyota Australia builds 100,000 Camry, Camry Hybrid and Aurion models annualy — 70 percent for export markets, such as the Middle East — Toyota Thailand builds 880,000 units annually, exporting a wide range of vehicles to Australia and Association of Southeast Asian Nations — or ASEAN — member states. Furthermore, a free trade agreement between the two countries means vehicles, such as the HiLux and the Corolla, from Thailand enter Australian ports duty-free.

The plant, partially funded by a $63 million AUD contribution from Australia’s Green Car Innovation Fund and opened at this time last year, will close halfway through its expected lifespan of 10 years in 2017, shedding 2,500 jobs with thousands more down the local supply chain in the process.

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Australian Supplier Association Warns Of 33,000 Jobs Lost In Wake Of Producer Exits Thu, 13 Feb 2014 16:00:29 +0000 2010-2011_Holden_VE_II_Ute_(MY11)_SV6_utility_(2011-04-22)_03

In light of Toyota Australia’s decision to cease all manufacturing operations in Australia by 2017, the Federation of Automotive Products Manufacturers is warning that as many as 33,000 jobs in the supply chain are at risk of following the automakers out of the country.

Just-Auto reports that the lost jobs include those in design, engineering, prototyping, R&D and assembly. FAPM said it was satisfied with the reasons behind Toyota Australia’s production exit, though president Jim Griffin warned of rough seas ahead:

“We may now not have time enough to transition. Our industry has the skills and know-how to be competitive but we need time and assistance to re-shape our businesses, to get new customers and diversify into new markets.”

FAPM chief executive also added that diversification, exporting and/or importing new business models outside of the dying local automotive industry may be the only way through the storm, even if most of their membership won’t make it out alive when the last Aurion and Commodore leave the assembly line in three years’ time.

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Toyota Shuttering Australian Factory By 2017, Local Industry Dead Mon, 10 Feb 2014 15:58:31 +0000 Toyota Landcruiser 70 Troop Carrier Workmate

Toyota announced Monday that as of 2017, the automaker will no longer manufacture any of their vehicles in Australia, driving in the final nail to the coffin containing the nation’s local automotive industry following similar announcements by Holden and Ford.

Toyota Australia head Max Yasuda and Toyota Motor Corporation head Akio Toyoda made the announcement at the automaker’s factory in Altona — a suburb of Melbourne — before an audience comprised of various media and the factory’s 4,200 employees. Yasuda claimed numerous factors in the decision, citing high costs of manufacturing, low economies of scale, increased competitiveness surrounding current and future free trade agreements, and the “unfavourable” Australian dollar as among the many reasons for the closures.

“We did everything that we could to transform our business, but the reality is that there are too many factors beyond our control that make it unviable to build cars in Australia,” Yasuda said. “Although the company has made profits in the past, our manufacturing operations have continued to be loss making despite our best efforts.”

The Australian Manufacturing Workers Union warned that Toyota’s complete exit from the nation’s manufacturing base would devastate not only those directly affected, but up and down the supply chain, as well. AMWU vehicle secretary Dave Smith added that the final result would be “a potential recession all along the south-eastern seaboard.” The Australian Council of Trade Unions also warned that the pullout would ultimately cost 50,000 jobs and erase $18.76 billion from the local economy.

On the government side, Industry Minister Ian Macfarlane said he was disappointed in the decision, and felt that the government would have been able to help had there been enough time to put a plan in place to keep Toyota manufacturing in Australia. Victoria Premier Denis Napthine concurred with Macfarlane’s sentiment and desire to have been able to work through the issue, and would be seeking a commitment from Australia’s coalition government — currently led by Prime Minister Tony Abbott — for a comprehensive adjustment package similar to the one made to Holden employees late last year.

On the subject of government subsidies, Abbott said his government had wanted Toyota to soldier onward, going as far to hold private talks with Yasuda as recently as hours before the announcement of the manufacturing pullout — contradicting what Abbott said in an earlier press conference regarding knowledge of the announcement — though as with Holden prior to its decision, paying the automaker any extra taxpayer dollars was ruled out.

Abbott said that while nothing could be said or done to “limit the devastation that so many people will feel” from the fallout of Toyota’s decision, he wanted everyone to remember that “while some businesses close, other businesses open, while some jobs end, other jobs start,” and that there would be “better days in the future.”

Opposition Leader Bill Shorten, proclaiming the Toyota closure an “unmitigated disaster,” offered this statement on the matter:

The car industry has died under the Abbott government — it’s a disgrace.

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Australian Government to Create $89 Million Fund For Affected Holden Employees Thu, 19 Dec 2013 11:00:58 +0000 holden-emblem

In the wake of General Motors’ decision to cease all manufacturing operations through Australian subsidiary Holden by 2017, the Australian government has announced that they will create a $100 million AUD ($89 million USD) fund for affected employees.

Australian Prime Minister Tony Abbott is creating the fund and programs related to help transition the nation from heavy industrial manufacturing to “higher value-added” production beyond subsidies. Abbott had this to say about the matter:

In the end, no government has ever subsidized its way to prosperity. This government will be very loathe to consider requests for subsidies. We will be very loathe to do for businesses in trouble, the sorts of things that they would be doing for themselves.

The fund will comprise of $60 million AUD from the federal government, $12 million from the state of Victoria, and the remainder from the state of South Australia. Abbott expects GM will contribute the fund, as well.

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Holden To End Australian Manufacturing By 2017, Transition To “Sales Company” Wed, 11 Dec 2013 05:41:46 +0000 450x337xHolden-VF_Commodore_Calais_V_Concept_2013_800x600_wallpaper_01-450x337.jpg.pagespeed.ic.s3LoDh1Ve2

Holden informed the Australian federal and state level governments that it will cease car production in Australia by 2017, citing a “perfect storm” of unfavorable exchange rates, high production costs and a small but competitive car market that has seen sales of traditional Australian-made rear-drive sedans and Utes plummet in recent years. An estimated 3000 workers are said to be directly affected by the closure of Holden’s manufacturing facilities.

The news delivered a crushing blow to an industry still reeling from Ford’s departure earlier this year. Shortly afterwards, Holden appeared to re-affirm its commitment to Australia, but now it appears to be for naught. In a prepared statement, outgoing GM boss Dan Akerson said

“We are completely dedicated to strengthening our global operations while meeting the needs of our customers.

The decision to end manufacturing in Australia reflects the perfect storm of negative influences the automotive industry faces in the country, including the sustained strength of the Australian dollar, high cost of production, small domestic market and arguably the most competitive and fragmented auto market in the world.”

Long-time TTAC readers will be familiar with our extensive coverage of Holden’s on-again off-again manufacturing decision. At first, there was said to be two new global sedans, including a new Commodore (said to be based on the front-drive Epsilon II architecture), with Holden boss Mike Devereux publicly committing to building a new Commodore in Australia at the launch of the most recent generation.

Just as TTAC predicted, Holden will become a “national sales company”, presumably importing GM cars made in Korea, Thailand and even China.  The Thai built Colorado and Korean built Cruze and Malibu will comprise the future of Holden’s lineup, as demand for the Commodore and Ute has fallen consistently. In addition to the aforementioned factors, the end of protectionist tariffs on imported cars is also cited by many as the downfall of the traditional Australian car, with consumers opting en masse for Thai-built trucks and more fuel efficient Japanese, Korean and European vehicles.

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Australian Car Industry Dead As Devereux Out, GM Tools Up For Front Drive Commodore Mon, 04 Nov 2013 18:44:59 +0000 2013_holden_malibu_australia_03-0612

If you want to see the future of Holden in Australia, this is it. Yes, it’s the same car that Jack Baruth took to the woodshed in today’s edition of TTAC, but it’s also a harbinger of things to come for the iconic Australian marque, with the announcement that Holden’s Elizabeth, Australia plant will be tooling up to produce the first ever front-wheel drive Commodore. And even that looks doubtful.

It hasn’t been a good week for Holden, and news of the Holden Ute’s likely demise was just the first blow. Last week it was announced that Holden boss Mike Devereux will be departing for GM’s Consolidated International Operations in Shanghai.

Devereux’s departure is seen as a serious blow to Holden’s future. The British-born, Canadian-raised veteran of GM was widely seen as the man who could help turn around Holden with a 5-year, the widely-praised, outspoken executive was credited with helping shake up a badly underfunded division of GM that was at once perpetually on the brink of collapse and unable to recognize its own poor financial health. promoted to Vice President of sales, marketing and aftersales at GM’s Consolidated International Operations, which is based in Shanghai and covers more than 100 countries across Europe, Asia and the Middle East.

The ongoing uncertainty regarding Holden is creating a political climate where subsidies for Holden and other auto makers (including Toyota) are rapidly becoming unpopular with the public. But that isn’t stopping Holden from forging ahead with retooling its factory in the South Australian town of Elizabeth to build an all-new large sedan, that will be front wheel drive and likely based on the Epsilon II architecture that underpins the Chevrolet Malibu, Impala and other sedans. This new Holden has all but been confirmed to be the new Commodore, and would mark the first time since its introduction in 1978.

While TTAC has been reporting on a possible shift to an FWD Commodore for years, the latest developments appear to be the final blow for the division’s existence as anything but another brand for GM’s global architectures. The line of unique cars and engineering carried out down under will likely die with the VF Commodore, while 2016 will mark the year that the big rear-drive Australian sedans took their last breaths.

All of these developments reflect an overarching and unavoidable theme of today’s automotive industry: consolidation. Despite being the darling of enthusiasts, Holden is losing money hand over fist, particularly with Australian-built, market-specific vehicles built on the Zeta platform, such as the Commodore, Ute and other variants. In a market with 60 brands competing for 1 million sales, unprofitable players like Holden are suffering from shifting consumer tastes (towards crew cab pickups, Japanese compacts and more premium cars), a freer economic market for new vehicles and increased fuel prices.

On the corporate side, Devereux’s move to Shanghai is a reflection of China’s increasing importance in GM’s international operations. It’s possible that as Holden wanes, GM could copy Ford’s move of bringing the once distinct Australia/New Zealand markets under a regional umbrella, with Holden becoming little more than a brand selling Thai-made pickups and Korean made Cruzes. And maybe, if they’re lucky, an Epsilon sedan that is made in Australia, not Korea.

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Holden Prepares To Euthanize The Ute Wed, 30 Oct 2013 17:21:08 +0000 2010-2011_Holden_VE_II_Ute_(MY11)_SV6_utility_(2011-04-22)_03

2016 will be a pivotal year for Holden’s Commodore-based Ute. Declining sales and shifting production capabilities could mean that the traditional Aussie Ute could become extinct, as both the Commodore and Ford Falcon Utes die off.

While the Falcon is slated to die within the next three years, Holden is at a crossroads regarding the Commodore. Executives from the Australian GM outpost have issued vague statements about a global platform for Australia, which could very well be a front-drive layout – if Holden even sticks around to build cars in its home country.

Ute sales have been decimated by an influx of mid-size pickup trucks built in Thailand, where labor costs are significantly cheaper. Auto makers can also take advantage of a free trade agreement to import Thai-built vehicles with zero duties. By contrast, Australia, where Utes are manufactured, is a much more expensive country to build cars in, and has seen its domestic auto industry nearly wiped out due to cost concerns.

Sales of the redesigned Commodore and its variants are up 15 percent year-to-date, but Ute sales have fallen 31 percent in the same period. While over 100,000 Thai built pickups have been sold so far this year, just 4100 Holden Utes and 3500 Falcon Utes have been sold in 2013. Trucks like the Toyota HiLux, Nissan Navarra, Ford Ranger and Holden’s own Colorado dominate Australia’s best-selling vehicle list, with the HiLux selling 40,000 units in 2012 – double that of the Holden Ute’s best year ever in 2004.

A combination of a boom in mining and a desire for a more practical family car has spurred sales of the Thai-built trucks. Unlike the two-seater Utes, the Thai trucks have four doors and two rows of seats as well as four-wheel drive, making them a replacement for station wagons and other utility vehicles.

For all the talk of the Ute being an icon of the Australian motor industry and its supposed desirability among enthusiasts, the cold reality is that nobody wants this car. And until that changes, it is on an inevitable death spiral.

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Mulally On Closing Australian Ford Plants: “Doing The Right Thing” Thu, 22 Aug 2013 14:01:18 +0000 000-fpv-gt-broadmeadows-628

At a dealer event in Sydney, Australia, Ford CEO Alan Mulally defended the company’s decision to close its Broadmeadows and Geelong assembly plants in this country, saying it was Ford’s only option if they wanted to remain in the Australian market, what Mulally called the most competitive in the world. The Ford executive also explained that the automaker is taking three years to manage to shutdown in order have an orderly transition and to treat “stakeholders” equitably.

“Of course, it is a serious consideration where we decide to make things, but the world is becoming more and more integrated and you have to be competitive. “You have to be competitive or you don’t get a chance to stay in business and serve the customer. We’re doing the right thing by the consumer in the longer term.”

Mulally said that the decision to close the plants had nothing to do with the quality of Ford’s Australian built cars including the big rear wheel drive Falcon.

Mulally told dealers,

“I loved the Falcon the first time I was in it. But (the large car) market is really, really small. The customers have moved on to smaller, more efficient vehicles, and this is exactly what we are going to provide.”

Asked why Ford didn’t close the plants immediately, Mulally said,

“We really want to have an orderly transition, out of respect for all the stakeholders. That’s why we are refreshing the Falcon, because there are a lot of people that love the Falcon. And we will refresh the Territory, too. Absolutely we are doing the right thing for all the stakeholders involved, including employees, the supply base, the industry, we’re doing absolutely the right thing.”

Mulally also said that there was nothing the Australian national government, which has provided incentives to Ford in the past, could have done, that the only way Ford could remain competitive in that market was to import cars there, like every other automaker doing business down under. Ford is planning on building 15-20 new plants in Asia to supply Australia and other markets in the region.

“We have worked very hard to make a viable business here. We have had a tremendous public/private partnership and we are just not competitive making vehicles here in Australia. So we are doing the right thing. Any company needs to be making a reasonable return so they can continue to invest in new products. You know, this is the most open market in the world, the most competitive market in the world. There are more brands here than anywhere else in the world. There are more marques than in the rest of the world. This is a really competitive market and if you are going to get a chance to participate here, you have to be really competitive.”

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HSV Gen-F GTS: Imported From Adelaide, But For How Much Longer? Thu, 11 Jul 2013 14:38:45 +0000 Click here to view the embedded video.

Holden and HSV try their hand at the “Imported From Detroit” style car commercial. As someone who has always been partial to Aussie muscle sedans, it’s easy for me to say I’m a fan. No doubt the line about cars becoming “smaller, quieter and more vanilla” will resonate with many of us. In a country where the Mazda3 and Toyota Corolla have knocked the Commodore and Ford Falcon off the top perches of the sales leader boards, it carries extra significance.

The latest news out of Australia shows that Holden’s Australian manufacturing base is barely hanging on, searching for new product in the post-RWD Commodore era and hitting up the Australian government for yet another round of subsidies. The sad fact is that the Commodore, like the soon-to-be-departed Falcon, is an anachronism. As our own Marcelo De Vasconcellos put it

Welcome to the brave new world. A world where what’s available in your local markets is more influenced by what people predominantly prefer the world over, than whatever the locals may wish for.

In this case, that is a more efficiently packaged sedan, and that would suggest a transverse layout, smaller engines and a footprint appropriate for markets beyond Australia. There may be a chance that the next Commodore rides on some kind of Alpha platform, but long-standing rumors suggest that it will in fact resemble every other front-drive GM sedan out there already.Interestingly, an SUV such as the Captiva, has been ruled out for Australian production, despite being cited by some as a potential savoir for Australian car factories. The reality is that a Thai-built Captiva is far more profitable, and that’s not going to change any time soon.

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Sudden Deceleration: Volkswagen Offers Free Inspection, No Recall Fri, 07 Jun 2013 13:30:19 +0000 Golf Repair - Pocture courtesy

After enduring what The Motor Report calls “a spiraling and damaging media campaign – run, in the main, by Fairfax media,” Volkswagen spoke up. According to Reuters, “Australian Managing Director John White told Australia’s Fairfax newspaper on Friday that VW “have issues” after car owners complained of transmission and engine failures causing loss of power, but did not order a general recall.”

In an open letter, Volkswagen invites customers to contact the company, or to come to a Volkswagen dealer to for a free inspection. Says the letter:

“We understand the recent coverage has caused some concern for our customers. We feel the best way to demonstrate our commitment is with several immediate measures.

For peace of mind, we’re offering free inspections of your Volkswagen vehicle at any Volkswagen dealer throughout Australia.”

Volkswagen also established a free hotline. Following a Coroner’s inquest into the death of a 32 year-old woman at the wheel of a Golf, a media campaign demanded a recall for a defective DSG and clogged diesel filters. The fact that the lady’s Golf was a gasoline powered manual became the first victim of the campaign.

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Toyota Looking For Government Cash To Help Sustain Australian Operations Wed, 05 Jun 2013 10:00:09 +0000 16opb-aurion-presara-hero-front-ink-2012-749x422

Australian media is reporting that Toyota is next in line for some government cash, following Holden’s deal with the government to keep production of the Commodore and other models in Australia.

Toyota currently builds the Camry and Aurion (a V6 powered sedan based on the Camry, pictured above) at a factory near Melbourne, and a deal with the government is said to bring about a third model, likely the RAV4. Toyota’s Australian division head didn’t hesitate to re-affirm the company’s commitment to Australia, stating that they would remain in the country “indefinitely” and were taking a “long-term” view of things, even as rival firms panic about unfavorable exchange rates.

Local car production has been a money-loser for Toyota, with Australian outlet Go-Auto reporting a $160 million loss over the last three years. If Toyota’s deal is similar to Holden’s, Toyota will have to pony up a lot more cash on its own – with GM contributing $1 billion to keep production running until 2022.

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We’re Not Getting The Holden Ute, But Not For Reasons You’d Expect Mon, 03 Jun 2013 15:59:37 +0000 ge5547549213459505029

Every so often, the same tired rumor will pop up again, like a particularly resilient pimple that habitually reappears in the same conspicuous spot. Thanks to the incessant hunger for clicks among auto websites, these rumors refuse to die, no matter how asinine they are. How many times have you seen a “BREAKING” or “EXCLUSIVE” story on the next Toyota Supra or some absurd BS fabrication regarding a diesel Mazda MX-5?

The latest round of bollocks concerns the Holden Ute, another car that tickles the fancy of enthusiasts on all sides of the globe, but would be a commercial nightmare if they ever tried to export it to America. One Australian publication is now claiming that a guerilla marketing campaign showing Mark Reuss lapping the Nurburgring in a brand new Ute is part of a ploy to export the Ute to America. Of course, other car blogs have been lathering themselves up into a frenzy over the prospect of a very expensive quasi-pickup that they will not purchase once it gets here.

Holden claims that there will be some kind of major announcement regarding the Ute next month. I’m going to be the first to say it will not be related to any Ute exports. There are two simple reasons here: the US-Australian dollar exchange rate is abominable as far as exports are concerned, and there is likely little to no demand for a very pricey product that is neither fish nor fowl. Who is going to pay $50k for Corvette powered pseudo-pickup wearing a Chevrolet badge. Did we discuss the UAW’s reaction to an Australian built pickup, or the whole “cannibalizing GM’s new ‘lifestyle pickup’ thing “either? Both of those matter, but would require their own articles to really get into.

One thing that is not a factor is the chicken tax. Not long ago, Holden used the chicken tax as an excuse for why it’s been unable to export Utes to America. TTAC commenters soon produced plenty of evidence showing that Australian cars and ”light commercial vehicles” (i.e. pickups and Utes) can be brought to America duty free. So that excuse is out. I feel for Holden though. The Australian domestic car industry is going down the tubes, their signature product is about to become just another boring front-drive appliance and all they want to do is send some good product to world markets.

The problem is nobody wants it. No matter how loud the internet cries out for it.

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Sudden Deceleration: Australian Media Blames Volkswagen Golf (Manual, Gasoline) Driver’s Death On DSG, Clogged Diesel Injectors Mon, 03 Jun 2013 11:35:27 +0000

Sorry, subtitles not available


The death of an Australian woman who was rear-ended two years ago is making new headlines.  In 2011, 32-year-old Melissa Ryan was killed when a truck with two trailers hit her Volkswagen Golf from behind. A coroner is looking into the matter. The report is expected to be completed in July. In the meantime, Australian media does not let simple technical facts get in the way of a bad story.

The matter received new publicity after Fairfax Media, an Australian group that owns large Australian and New Zealand newspapers, along with the popular Australian car site, published a story about the inquest.  The story in and sibling media starts with reports that “at least 15 Volkswagen owners have revealed they experienced the same terrifying loss of acceleration that appears to have led to the 2011 death of 32-year-old Melissa Ryan.” This while the cause of the death has yet to be determined.

Seven paragraphs into the story, it makes the laborious statement that “Fairfax is not suggesting Ms Ryan’s death is linked to a fault in her car,” only to suggest in the rest of the story, that it was the car that killed Ms. Ryan, and that it was Volkswagen’s bedeviled DSG gearbox that killed her:

“Volkswagen has this year issued recalls for almost 400,000 of its cars in China and 91,000 in Japan for problems with the high-tech automatic direct shift gearbox (DSG). The DSG problems have been connected to sudden power loss.”

Also, says the paper, there is “an injector problem with some diesel models” of Volkswagen, which can lead to “sudden deceleration.”

The trouble is, Ms. Ryan’s Golf had a stick shift, a fact that was noted, but nonetheless ignored in the story. The car also ran on gasoline, a fact that remained unmentioned.

It was left to Karl Gehling, spokesman of Volkswagen Australia, to state:

“The vehicle at the centre of the inquest is equipped with a petrol engine and a manual transmission. Neither of the customers interviewed for the story has a vehicle fitted with a DSG transmission either.”

In a follow-up story on Saturday, reports that “the federal government has launched an investigation into possible faults in popular models of Volkswagens which have led to motorists experiencing a frightening and sudden loss of acceleration while driving their cars.” It also says that “Volkswagen did not return Fairfax Media’s calls.”

It took TTAC all but five minutes to receive a return call from Volkswagen’s Wolfsburg HQ  to Tokyo. Peter Heinz Thul, at Volkswagen responsible for groupwide Product Communication, said:

“There is no reason why this accident, which occurred now more than two years ago, is gaining attention again in connection with the recalls in China and Japan in relation to the dual-clutch gearbox (DSG). The accident definitively had nothing to do with the DSG, as the Golf GTI involved was fitted with a manual gearbox. prides itself of being “Australia’s Largest Car Review Website,” but is willing to ignore the fact  that clogged diesel injectors can’t slow down a car that runs on pump gas, just like DSG troubles would be hard pressed to affect a manual.

The sudden attention may even come as a disfavor to the deceased and her beneficiary heirs. According to a source close to the inquest,  there may be a witness who talked to Ms. Ryan via a cellphone while she died.

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The Holden That Almost Became A Buick Fri, 31 May 2013 15:08:02 +0000 Concept Car Buick XP2000   (2000)

The most famous Holden product to ever wear a Buick badge is the Chinese-market Park Avenue, a car that Buick dealers inexplicably rejected. But back in the mid-1990s, GM apparently planned to use the VT Commodore architecture as the basis for a new Buick sedan, previewed in the XP2000 concept above.

Squint really hard and you can see a resemblance in the basic shapes of the two cars. Since the XP2000 was a concept, it’s likely that the Buick production version would have stuck closer to the Holden design, hardpoints and all. The concept used a 5.0L small-block V8 and GM’s 4-speed transmission, but a smaller displacement V8 was rumored at the time.

The XP2000 had a lot of features that were considering cutting edge for its 1995 debut but are relatively mundane today; a crude version of a lane keep assist, adaptive cruise control  as well as a vehicle key that could automatically adjust things like seat position, mirrors and climate control based on driver preferences. None of these would be earth-shattering today but they were pie-in-the-sky ideas nearly 20 years ago.

The biggest payoff may have been the readiness of the VT chassis to adapt left-hand drive. Without it, we would never have gotten the Pontiac GTO, and other export markets would have missed out on the Chevrolet Lumina.  If anything, the XP2000 is another footnote in the stilted story of GM’s attempts to bring the Holden Commodore to North America.


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Holden Sticking With Australia Despite High Costs Fri, 24 May 2013 15:20:53 +0000 calais-450x270

With the launch of the all-new VF Commodore just around the corner, Holden’s Mike Deveraux doesn’t Ford’s bad news to steal the limelight away from his very important product introduction.

Amid a backdrop of constant squabbling between the governing party and the opposition, Deveraux urged both sides to find common ground over the fate of Australia’s auto industry

“…both sides of the equation understand how critical the auto industry is to the economy and how plugged-in in terms of its viability. We have a pretty solid plan. We will need to work closely with the opposition and government to make sure that Australia’s policy setting are competitive globally.”

As of April, the Commodore was ranked #10 in Australia’s sales chart and in danger of slipping. With the tide turning against large rear-drive sedans, Deveraux and Holden have to figure out how they’ll build cars for the Australian market without turning Holden into just another outpost for rebadged GM global products. Rumors of the Commodore becoming front-drive would be a blow for enthusiasts, and bring an end to Australia’s muscle car era, but may end up aligning better with market tastes. Ironically, Chrysler could end up being the lone auto maker to offer a rear-drive sedan in Australia should that scenario take place.

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The Day The Blue Team Dropped The Ball Fri, 24 May 2013 12:45:15 +0000 2005-2006_Ford_BF_Falcon_Ute_XR6_Turbo

Something was happening, and must have been very big or wrong for our office to became that noisy during the lunch break. In fact, the bad news were just a couple of clicks away.

Today is a sad day for the Australian automotive industry. Heck, I would venture to say it is a sad day for the country. I don’t know how sad or upset the street is, but happy is not the world I’d use to describe the mood I saw around the rest of the afternoon.

Ford’s announcement that it will close its manufacturing operations in 2016 may look like a surprise, but my gut tells me that this has been brewing for a long long time. For me it is kind of an expected outcome, because since we arrived here, I have yet to hear any of their leaders committing on the record to their production activities after 2016.

I can only speculate about what happened in Broadmedows (or Dearborn), however I have seen enough to try to draft an explanation.

The reduction of the tariffs and elimination of import restrictions since the end of the 90′s, created a situation of increased competition in both models and pricing for the local manufacturers. This situation has reduced the market share of locally made vehicles to around 15-20% (from >50%) of the total market. At those volumes, it is very very hard to sustain a manufacturing operation, specially if there are no export programs.

The increased vehicle choice, raising fuel prices and popularization of the SUV/CUV has had a strong effect in switching consumer tastes. A big sedan, comfortable as it is, loses points when compared with the increased practicality offered by a SUV. Higher fuel prices make big cars less attractive, specially in the cities where their higher weight penalizes the increasingly important lt/100 figures. Enter the small cars, and small is a relative term here, since most of them are of the C-segment variety. Adding 1+1, it is easy to see on the streets what VFACT’s numbers have been reflecting for some time: a market increasingly moving toward SUVs and C-segment cars. I saw this change happening before my eyes in my home country during the 90′s.

The cost of making business has had its fair amount of influence here. The high Australian dollar and the increasing energy, taxes and salaries costs are causing a loss of competitiveness for locally manufactured goods. That is hurting not only the auto industry, but the whole sector.

Ford also has itself to blame for some of its woes. A first easy shot is the AU Falcon, a self-inflicted blow from which they never recovered. The lack of an export program like the ones in place at Toyota or Holden means Australia is Ford’s main market for its locally made cars. With a dwindling big car market share that only means trouble. To Ford’s credit, they developed the terrific Falcon-based Territory CUV, a car that has been a top seller in its segment almost since its launch… constrained to local sales by the lack of an export program. The lack of investment, marketing and advertising for the car must have had its fair amount of influence too. It creates the impression that has been left to its own devices. The FG Falcon is a very good car, something I hear even from people with far more knowledge of the industry than me.

And then we have the perception of the product in the public. If the forums and comment sections of newspapers are any indication, there seems to be an image stigma associated with large domestic cars. The word bogan is usually thrown around when mentioning its owners. Past quality woes are also name on some of them. On top of that, the Falcon in particular suffers because it is the de facto choice of the taxi trade down here (and is easy to see why, it is good on LPG and is a tough car). Finally, large cars are considered gas guzzlers, despite the big advances in fuel consumption achieved in the last 10 years.

What comes next is uncertain.

An Aussie icon will be gone forever and Ford will almost surely face a severe backlash, hurting even more its position in the market (they were in 3rd position in 2011 and were sitting in 5th last time I checked). They are bringing some more product and eventually they will recover. I hope they maintain their promise of keeping their development activities here.

But the big elephant in the room is what will happen with the suppliers after 2016, which will lose an important customer and volume, and as Mr. Nasser said in a previous interview a couple of weeks ago, when lacking the necessary scale, a domino fall in the sector can take the whole industry down.

Indeed, a sad day for the industry.

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TTAC Salutes The Ford Territory Thu, 23 May 2013 12:00:17 +0000 941536c3-4096-4ddd-99d5-f1deb4feef84-lg

While the Ford Falcon is getting the bulk of the attention with respect to Ford’s soon-to-be-shuttered Australian operations, Ford also made another product, based off the Falcon platform, that never made it to our shores. The Ford Territory might be the most desirable CUV ever made.

Around these parts, the above statement doesn’t carry much weight, but beneath the Freestyle-esque exterior lurked a radically different drivetrain. Using the rear-drive Falcon’s running gear, the Territory’s base powertrains consisted of a 4.0L I6 and either rear or all-wheel drive. Later variants added a diesel V6 as an option. Unlike the Falcon or its Ute derivatives, there was no V8 available. A 329 horsepower turbocharged I6 was available on the second generation Territory, but buyers looking for even more power had a brief opportunity for even more power.

The FPV F6X (pictured above) borrowed the Falcon FPV6′s 362 horsepower turbocharged I6 but retained the Territory’s AWD system. 60 mph came up in about 6 seconds, but the FPV F6X had a big problem; a Falcon XR6T with a more powerful I6 engine was about 30 percent cheaper, and the F6X was barely distinguishable from the regular Territory Turbo. Sales were predictably slow and the F6X lasted one year only.

Although there were calls to export the Territory, nothing ever really got off the ground, and the Territory was left to its home market of Australia, as well as a handful of exports to right-hand drive countries like Thailand. At one time, there were even calls to send it to the United States, but it’s difficult to imagine American consumers caring enough about the rear-drive layout and I6 engine when it looked nearly identical to the Freestyle/Taurus X and carrying the price premium associated with being an Australian import.

I can’t help but feel saddened knowing that the Territory is marked for death along with the Falcon. The business case may no longer be there, but the Territory represents an increasingly rare-breed in the automotive world; a vehicle that was derived as a unique solution to local tastes and attitudes. The fact that it could give many sports cars a real fight in a drag race, while looking like an ordinary family hauler makes it even more bittersweet.

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Ford Finally Pulls The Plug On Australian Manufacturing Thu, 23 May 2013 11:00:57 +0000 2009-2010_Ford_FG_G6_Limited_Edition_sedan_01

A sad day for both Ford and Australia. The Blue Oval has officially announced an end to building cars in Australia, which Ford has done since the 1920s.

Both the Broadmeadows assembly plant and the Geelong engine plant will close in 2016, resulting in a loss of 1200 jobs. Declining sales of the Ford Falcon, and the expense of retooling Geelong to build engines that are complaint with Euro 5 emissions standards. Ford’s One Ford strategy, which seeks to eliminate regional specific models like the Falcon, also hastened the demise of Ford’s Australian manufacturing operations.

A rising Australian dollar has also been identified as a culprit, but Holden and Toyota are expected to continue their manufacturing operations in Australia despite this. Holden has even committed to a new generation of Commodore beyond the yet to be introduced VF – though it may not follow the traditional rear-drive Aussie sedan template, as smaller, more fuel-efficient cars have become popular in Australia.

Either way, Ford’s Australian operations have been on shaky ground for some time. Today is only a confirmation of what many thought was inevitable.

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Where Is Currency Manipulation When We Need It: Ford Shuts Down Down Under Thu, 23 May 2013 08:41:51 +0000 File picture of Ford Australia's head office in Melbourne

Ford has long been at the forefront of the currency debate, claiming currency manipulation when the yen went to levels that nearly killed the Japanese auto industry, and shouting “currency manipulation” now that the yen is back to normal levels. Now, Ford itself experiences the devastating effects of changing exchange rates:  Ford is shutting down all its manufacturing operations in Australia. The reason: A strong Australian dollar.  Says Reuters:

“Ford Motor Co  will shut its two Australian auto plants in October 2016, blaming a strong currency and costs that are hitting manufacturers just as the country looks for other sectors of its economy to cushion the end of a mining boom.”

According to the report, the closure of Ford’s  engine plant in Geelong and its vehicle assembly plant in Broadmeadows will cost 1,200 jobs. Ford  built 37,000 vehicles in Australia last year, and has been in the country since 1925.

“Our costs are double that of Europe and nearly four times Ford in Asia,” Ford Australia CEO Bob Graziano told Reuters. “The business case simply did not stack up. Manufacturing is not viable for Ford in Australia.”

The Aussie has climbed from just over 60 cents in 2009 to above parity with the U.S. dollar, where it has been for more than two years. Currently, one AUD costs 97 cents.

A few weeks ago, Jac Nasser, the former head of Ford, warned that Australia’s car industry has passed the point of no return, and said it would die within the next few years.

I am sure that in this case, Ford would have been grateful for a little currency manipulation – or shall we call in central bank intervention – and would not have complained.  GM’s Holden said it will cut 500 jobs, citing damage from the high Australian dollar.

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