Australians love a good 'barney'. Favourite football team, pub band, soap opera... federal government? -- anything's cause for an argument. We're a nation of people who will 'blue' at the drop of a hat.
So when Suzuki's General Manager, Tony Devers -- a born and bred Aussie himself -- dropped into conversation with two journalists his considered view that local vehicle production is not viable, he knew that it would be reported and it would likely stir up a hornets' nest.
When we published Devers' comments in our CN Confidential piece on Saturday last week, we asked for readers providing feedback to reveal the car they own as well. Many readers responding wrote back with well considered arguments delivered in a measured way -- and we're pleased to bring those to you now.
One of the earliest emails came from Ray Wilson in Perth. Ray explained in detail how his Calais was ideal for his purposes and the needs of his growing family. Even in a market as diverse and competitive as Australia, there's little -- barring other locally-made cars -- that address the same needs. His was an eloquent argument from a retail customer's point of view:
I do support the local manufacturing industry.
I drive a Holden VE Calais V6 SIDI purchased in December 2009.
Real world economy of this car puts it ahead of my neighbours in:
1. A Honda Accord Euro with its tiny back seat space; and
2. A Camry with its lack of power.
Either an Aurion or a Falcon make for more realistic options and -- interestingly -- they've been developed and manufactured here in Australia!
As soon as there are two passengers, which in my family of two teens (both tall) and one toddler is a common situation, the local Toyota, Falcon and Holden full sized cars shine over others as a realistic, hard-headed alternative for the roads of our cities and countryside.
Rarely do car reviewers seem to realise that there's more to a car than just driving it when new or near new and around their favourite bit of "nice road".
I've driven a new Golf (checked it out when I was looking at this car late last year) and Skoda and they're lovely, albeit much more expensive than I wanted to pay for the sort of power I wanted in my car. BUT the cost of servicing those Europeans is way too much!!!!! A friend has paid over $1000 for his 45k and 60k services on his Golf and that pays for an awful lot of everything else that you may want from a car. Yes, I'd love to buy a Golf GTi and it would cost about the same as I paid for this Calais on the road, but it isn't the best option at this time in my life due to the family's needs. And I'd always be "saving up" for the high cost of servicing it!
Mr Devers fails to understand that in real-world conditions for many Australians, our local cars ARE "fuel-efficient, emissions-friendly and safe". I safely move my family around Perth and obtain a steady 9.5L/100km and expect that economy to improve when I have a few more kilometres on this Calais. It has the power to go on a country journey (i.e. to my sister's home four hours away) with the family on board and easily cope with overtaking, hills and road trains.
Mid-sized cars and SUVs of a size suited to our needs will not do much better than that economy -- and often worse as I note from road tests that I read carefully in all sorts of places.
And those alternative cars lack the spacious comfort and sporty nature of this car. The comments I make about this Calais could pretty much be made for the Aurions and Falcons that I've enjoyed driving, which are also locally manufactured. The only SUV I'd be able to afford and that would have the real world grunt and space necessary for my family would be the Territory and it's another locally manufactured vehicle! I can't afford a BMW X5 and the "full size" serious off-road alternatives are also much more expensive than I'm prepared to ever pay for a car -- not to mention their running costs and depreciation costs. The closest vehicle outside of the locals which would fit our all-round family requirements would be the new large Kia 4WDs. The Mazda CX9 looks great but is much more expensive again.
Mr Devers notes the possibility of maintaining a local Engineering base, but I doubt that this would be maintained if manufacturing goes off-shore.
Too many cars from other countries don't cope well with our roads, which indicates that these manufacturers don't really bother much with our conditions unless they're "forced to" and at least one reason why they're "forced to" is because our local large cars (Aurion, Camry, Falcon and Commodore) as so capable. Many imports may be refined on smooth roads in other countries but they don't cope with ours comfortably. An import which copes well with our conditions is not as common as I would like.
When it becomes a regular part of the way manufacturers build cars in other countries (and why would it when our market is so small?) to cater for our conditions better, then I would be prepared to change my present view. But until then, I think it is valuable (albeit economically costly) to maintain local manufacturing.
Ray Wilson
One of our regular readers and known Volkswagen enthusiast, Corey Ingleton, supported Devers' remarks that the local car industry could shelve its labour-intensive manufacturing and focus more on R&D.
I drive a Volkswagen Polo GTI, and have a Golf R on order...
I am a big GM fan though, I just don't think the size of the Commodore suits me.
I agree with Devers, especially if the government is spending ~$100k per local employee.
Other industries are doing the same, using Australia as a specialist hub of project managers and engineers and sending the "low skilled"/repeatable process work offshore. Done well, it doesn't have to mean job losses. The car industry could do the same.
Corey Ingleton
Geoff Langridge has been a paid-up supporter of the locals, but admits that the Australian manufacturers can't provide him with the sort of product he wants for his next car. He also takes issue with the Camry Hybrid for what it represents.
Emotionally, I want to retain as much manufacturing in Australia as possible -- I want to keep Aussies in jobs and I want the capability to do things ... here. And there is the question of our Trade Balance (import more than we export).
That said, Tony Devers has said the unthinkable ... and it makes sense.
And projects like the Hybrid Camry are just political stunts ... and like all such, fail spectacularly where it counts: number of vehicles actually sold. BTW, I HATE political stunts...
My current car is a 2007 Falcon Wagon. And I've still got its predecessor, a VS Commodore Wagon. Before that, it was a VN Commodore Wagon. BUT the next one is likely to be a Skoda or Mazda Wagon. Turbo-diesel. It won't be a Holden, and the Camry ... well, compared to the rest?
Regards
Geoff Langridge
With questions currently being asked of the build quality of vehicles manufactured in Thailand and sold in Australia, one of our readers named John suggested that a local design could be built in Thailand -- possibly to a higher standard of quality than we manage here.
I am a staunch Aussie but I have to admit this article has some merit. If it wasn't for taxes on imports and support for local manufacturing our cars wouldn't be in the ballpark. I love being able to buy cars built just down the road. Would I buy a Falcon built in Thailand? Yeah, I wouldn't hesitate if it was good. Ford and Holden have built rubbish for too long and they have lost me, I recently bought a 2005 BMW X5 instead of a new Falcon G6E Turbo. And I love it.
John
Another John, John Mangos, was happy to put his money where his mouth is, buying a Falcon G6E Turbo during the recent meltdown in global financial markets. He made no comment on Devers' opinion, but it's plain where he stands.
Yes, I support the local manufacturing industry.
I drive a G6E Turbo.
Had a few other things in mind when buying, but chose this in early 2008 due to GFC and wanting to buy a local product.
I must say the car has surpassed my expectations.
John Mangos
Dave Sloan was of like mind and defended unique models for our unique environment.
Australia is a unique market and loves its big sixes. We are not the US with big SUVs everywhere and we are not Europe, which is covered in four-cylinder hatches and turbodiesels. Australia is unique and should fight to keep its unique local models. Our locally made cars are some of the best performing and best value on the market.
I drive a WH Statesman.
Dave Sloan
Environmental considerations were very important to Samuel Gall, not only from the impact of indigenous designs that have grown too large and "wasteful", but in the context of the manufacturing of these same cars.
I personally believe that Ford and Holden have missed the boat. The Falcon and Commodore have become too large in size (too bulky) and too wasteful of resources to remain viable...
Ford, Holden and Toyota need to look at small cars to survive but I agree with the article in that a smaller, highly professional centre of excellence will ensure that Aussie engineering expertise stays in-country while wasteful (and polluting) manufacture goes offshore...
I personally drive a 1994 Honda Prelude and I do not subscribe to the one-eyed love of Aussie sedans and performance derivatives. But I DO want to keep factories in Australia if possible.
Samuel Gall
David Bruns was one who admitted that although he drove an imported car -- one of a size not offered by any of the locals -- he welcomed the country's ongoing commitment to full-scale vehicle production. As for Samuel's response, David raised an issue that went beyond the question of economics, but where Samuel's concern lay with the environment, David's was more strategic. His argument is not without a basis in history, when you consider GM-Holden's used to build 25-pounder artillery at the Fishermans Bend plant for the Australian Army during the Second World War.
Even tho I drive a VW Golf (local cars are too big for me), I am a strong supporter of maintaining the local industry. If we let it die it will never be resurrected and at the moment it provides not only unique cars for our country but also employment opportunities as car engineers and designers which feed into the ambitions and quality of life of the young.
There must also be defence-related advantages to maintaining a level of manufacturing expertise on-shore.
David Bruns
Another reader to support local manufacturing was Kim Smith, who pointed out that Toyota's production plant at Altona is one of the mainstays of the Victorian economy (believed to employ as many as 3500 workers) and its closure would have an ill effect on the whole country's economy.
I fully support car manufacturing in Australia. As we all are aware, Toyota's Altona plant employs many Victorians which in turn helps keep the Australian economy afloat. I would prefer buying a vehicle made in Australia vs. overseas, as I currently drive a 2010 Toyota Aurion, which is definitely one of the best cars I've ever driven.
Kim Smith
Guy Busato is resigned to our cost of labour pricing our finished goods out of contention on world markets and here too. He also acknowledged that there is a future for Australia's design and engineering talent, even if the manufacturing moves off-shore.
I drive a 2005 Nissan Skyline
I agree that we should not build cars in Australia... I want Australia to build them here but it is not economically sensible... Like footwear and clothes the labour intensive nature of production suits a low cost labour country.. The only level playing field in the industry for Australia is in design and engineering... It's better to develop and succeed in that part of the game rather than fight a losing battle trying to compete with low cost countries wasting tax payers money on subsidies and costing consumers more in the process... (And eventually failing any way).
Should the Poms subsidise the growing of bananas in glass houses to protect UK jobs from cheap imported African bananas???? I say don't waste your time on losing propositions...
Guy Busato
Callum lamented the lack of fuel-efficient diesel or four-cylinder petrol engines in the various companies' locally-built cars. That aside, he seemed to retain a soft spot for the Commodore, if not for the television commercial advertising it.
I honestly think that our biggest car manufacturers, Holden and Ford, need to get with the times. As I look at the new Commodores and Falcons available, all I see is V6 and V8 engines. The best fuel economy a Commodore can give is 9.3L per 100km. Our Toyota Prado, which is over 700kgs heavier on off road tyres gives better economy! (9.2L per 100km) It would be nice if Holden offered something along the lines of a turbocharged four-cylinder engine in diesel or petrol configuration. Audi's A6 is capable of 5.8L per 100km with its most efficient engine. What I want to see from our Australian car manufacturers is more efficient engines, better quality interiors and overall, more refinement. By the way, has anyone noticed that Holden's TV advertisements suck? They are so boring and lack any ferocity/aggression whatsoever! A Commodore deserves better.
Callum
Jack, who supports the local industry in spirit and with cash, offered praise for the performance vehicles of both blue and red brands.
Keep manufacturing vehicles in Australia, as we make great cars such as SS Commodores, XR6 Turbo Falcons FPV vehicles and HSV vehicles. I drive a 2010 Falcon XR6 Turbo, which I think is a great vehicle. I also work in the auto industry and have for over seven years.
Jack
Stephen Porter was outspoken in his scorn for the way the local manufacturing industry has been hijacked by vested interests.
Having been in the retail luxury car industry for 30 years, in Australia and the UK, I have always thought that the local car industry has been a gross waste of tax payer funds.
20 years ago the product was abysmal in quality and road performance. It's been dominated by politics, unions and subsidising employment, much to the Australian car buyers detriment.
For years the local product has been poorly finished, coming with old technology and not very pleasant to drive.
But as long as the govt handouts and deals continue there will be no change unless the buyers do it with their feet.
It will take a while as there is a large 'hangers on' list that will fight the change, suppliers, local pollies that want to stay in power and advertising just to name a few.
It's ironical that I now drive a new locally made Commodore Sportwagon SIDI after always driving an import.
As I feel it suits my business better and I didn't feel like spending from $55,000 plus, to buy an import that has the room and comparable performance for long trips.
Stephen Porter
Liam Dwyer was even more upset, but took an opposing view based on being one of those vested interests -- an original equipment parts supplier to the three local manufacturers.
The statement made by Suzuki Australia's boss is nothing short of utter garbage. I work for a company that supplies to GMH, Ford and Toyota and yet he does not realise the damage that would be caused if he had it his way. I own a Holden Commodore and I am very, very happy with it. He needs to get his head out of his back side and see what's reality. I have in the past never really had the desire to buy a Suzuki and now I am certain that I will not get one and I will continue to buy Australian-made to stick it in his face. Shame on him the selfish little moron.
Liam Dwyer
Two readers, Graeme Charrett and Eric Francis were convinced by Devers' argument.
I agree with all the comments of Devers, it's about time we changed our views on the local car industry. Best article I've read. I own a Mitsubishi Magna and a Pajero.
Eric Francis
I think that he has hit the nail right on the head. It is stupid to subsidise for local manufacture when the imported cars are better received by the buying public. I drive a Holden Epica CDX import.
Graeme G Charrett
Finally, we leave the economic argument against Devers' viewpoint to one of our long-standing readers, Warren. Warren drives an Alfa Romeo Brera, but fully supports local manufacture. His response is detailed and analytical -- and makes for interesting reading.
It should be clear to everyone that governments all over the world see great value in a vehicle manufacturing industry. It's easy to take pot-shots at the local industry in isolation but the simple fact is that our government does far less for our industry than almost all other countries who make cars. Thailand came up several times in the article and they are the perfect example -- the Thai government allow vehicle manufacturers a tax-free ride to encourage investment. Anyone who says it is a bad idea for our government to support car manufacturing needs to tell us what they know that governments like Thailand don't, if they want to convince me.
Mr Devers' figures are patently ridiculous, as were some of the comments in your article. e.g. You mentioned the $6 billion that the government has pledged to the industry but conveniently forgot to say that it will be delivered over a 13 year period and that for the bulk of it, the Green Car Innovation Fund, anyone getting money from the government must put up $3 for every dollar they get from tax payers. That money is clearly designed as an investment incentive, rather than a simple hand-out or subsidy. So far it has netted a $90 million investment from Toyota and around $400 million from GM Asia-Pacific, so it has clearly been successful.
Devers' figure of $100,000 per employee was based on his assumption that Holden Ford and Toyota only employ around 10,000 people and that no-one else's job was dependant on their manufacturing business. His numbers are well wide of the mark. Last time I checked, Holden directly employed 6500 people and Toyota more than 5000. It's safe to assume Ford are closer to Holden than Toyota, given both have large engineering arms, so we are really looking at something like 18,000 people. Add in suppliers and the number is variously reported to be anywhere from 80,000 to 120,000 workers who rely on a viable auto industry. Take the mid-way point and all of sudden Mr Devers' number has one too many zeros in it.
Spread it over 13 years and most of those employees will be getting more back in child-care rebates than it is costing the government to support their industry. Let's say the real figure is $1000 a year per employee, and I think it is probably even less than that, and let's say those employees earn an average of $40,000 a year. On $40,000, they will pay something like $12,000 in personal income tax, so the government is getting a 1200 per cent return on that $1000 investment every year, even before you take into account company tax and all the benefits the balance of trade gets from $5billion a year in exports.
You also held up MMAL [Mitsubishi] as an example of the effect of going to a full import model but what you failed to mention is that MMAL's manufacturing was not viable in 2007, which is the year you used in your comparison.
Why was that? The answer is simple, they produced a new model based on a car designed specifically for other markets that no-one in Australia wanted to buy. It is the perfect example of why local manufacture is so important. We will see the full truth of this if the next-gen Falcon ends up being a FWD Taurus, because I'll bet London to a brick it will be an unmitigated disaster from which Ford Australia may not recover. If buyers wanted large FWD cars, Ford would sell a lot more Mondeos than they do.
Let's look at Holden now. Commodore is the biggest selling car in Australia. You can say that it is propped up by fleet sales and private buyers don't want it but that is oversimplifying matters, because whilst it might be fleets who are buying them, it is private citizens who get to drive them. If your company provides you with a big, safe family car it means you don't need to go out and buy one for yourself, so it distorts the market. What really counts is what cars are parked in suburban garages and the simple fact is that more garages have Commodores in them than any other car. The next question then becomes -- if Holden stopped building Commodores, what could they import to take its place? Epica? Hardly. Opel Insignia? There is no way Insignia could offer anything like the value for money or driving experience a Commodore does.
Holden Cruze also needs to be considered, as it will be built locally from next year. Your suggestion that they would need to find 4000 buyers a month is very conservative, because they are already selling 2500 imported Cruzes a month, so they will need to lift it to 6500 to be in the game. Trouble is, even then they will only be selling 6500 x $25,000, which is well short of the revenue they get now -- 2500 x $25,000 + 4000 x $40,000. The real number of cars they will need to sell to maintain revenue is closer to 9000 a month, which is clearly impossible in the ultra-competitive small car segment. But it is not even that simple, because selling a car for $25,000 instead of $40,000, when it costs almost the same to make, means you probably need to sell three times as many to maintain your profitability. Now we are up to something like 20,000 Cruzes a month just to cover what you lose if you stop selling 4000 Commodores a month. It just shows why all three local manufacturers make large cars, because they are the only thing that is truly viable in the long term. A locally built Cruze might help Holden, especially if they become the Asia-Pacific supplier of all Cruze hatchbacks [or maybe the manufacturer of RHD Cruzes globally or something???] but without Commodore they could never survive.
Sorry to bore you but the simplistic approach everyone seems to take to this very complex question really gets up my nose. Devers would love it if local manufacturing went away because it would almost certainly mean that retail prices across the board would skyrocket without the pressure of having to keep the production lines rolling. i.e. If you have a factory running, the number of units you ship is sometimes more important than how much money you make on each, which keeps prices low.
The perfect example is the semi-perpetual run-out prices of Commodore SV6 and Falcon XR6. Ford and Holden have the margin to make those sorts of deep cuts but you can bet they will never be able to go anywhere near that with Cruze or Focus, because the margins are way too slim. I'm also sure Devers would love to see the back end of sub-$40k RWD sports sedans, it is probably his only hope of ever being able to sell a $40,000 4 cylinder Kizashi.
Cheers,
Warren BONES
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