Election results will determine future of Australian car industry

Article by Anita Panait, on September 6, 2013

While the Sept. 7 national election in Australia will determine who will next lead the country, it might as well as decide the fate of the local sites operated by General Motors and Toyota Motor Corp. Holden, GM's unit in Australia, is waiting on the result of the election before making a decision whether to invest further in the country beyond 2016.

The election will pit the current administration against an increasingly popular opposition. The current government headed by Prime Minister Kevin Rudd has set aside around A$5.4 billion ($4.8 billion) for the domestic car industry until 2020, pledging A$700 million more during the campaign.

Opposition leader as well as opinion poll favorite Tony Abbott wants to cut A$500 million from the subsidies by 2015 as the country faces worsening budget position. Abbott has said that it is “possible to do sophisticated motor manufacturing in this country without a government handout," referring to the money set aside for the local auto industry.

Kim Carr, Rudd's industry minister, remarked in a statement that the election will be "a referendum on whether or not we will keep making cars in Australia." Locally made cars accounted for around 80 percent of domestic sales in 1984, but soon found its share drop to just 13 percent in 1992, according to data from Ford and the Federal Chamber of Automotive Industries.

Likewise, the value of the country’s car exports in 2012 was 29 percent below the average of the previous 10 years, according to government data. Tonay Lemmo, chief executive of Autoteam Australia Consulting, quipped that Abbott’s policy would not be enough to keep carmakers in the country long-term, noting that the Australian vehicle market “is not big enough for a manufacturing facility." [source: BusinessWeek]

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Topics: australia

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