Car makers hammered
AUSTRALIA’S carbon tax — which doesn’t apply to imported goods — is ‘‘adding pressure’’ to local manufacturers, Holden says.
The car maker says carbon pricing ‘‘adds a further cost to our business at a time when the Australian dollar is extremely high, tariffs are at an all time low and we’re competing with importers that are able to offer very aggressive pricing as a result of the strong currency’’.
Holden spokesman Craig Cheetham says while his company supports the need to reduce the carbon footprint, it has an affect on its operations.
‘‘The tax only applies to locally made cars and therefore gives imported vehicles an advantage,’’ he says.
‘‘This places an additional pressure on our local manufacturing operations.’’
The carbon tax is a further blow to Holden, which on Friday announced it would reduce production at its Adelaide plant because of the high exchange rate of the Australian dollar.
The high rate makes imported products cheaper and exported products — Holden next year will export about 8000 Commodores to the US — far more expensive.
Mr Cheetham, speaking on behalf of Holden managing director Mike Devereux who is overseas on holiday, says the Australian car industry has never been more open and competitive.
‘‘Our continued focus is on improving our quality and productivity to ensure we remain globally competitive,’’ he says.
Australian car makers have been hit this year by five blows:
The introduction of the carbon tax;
Closures of component suppliers;
The cancellation of the Federal Government’s $800 million green fund that sparked the decision for
Local manufacturers are not able to pass the cost of the carbon price on to customers and have to absorb it into their already tight margins
Holden to build its small car, Cruze, here;
A decline in sales of its main product line of large cars; and
A strong Australian dollar that is making imported cars cheaper.
In July, Mr Devereux said the carbon tax would cost Australian car makers and component suppliers about $30 million a year.
But in a report commissioned by the Federal Chamber of Automotive Industries, accountancy firm PricewaterhouseCoopers put the figure higher. It says the three car makers operating in Australia would share an annual impost of up to $84 million.
The report calculates that that would increase the price of each Australianmade car by at least $400.
Tony Weber, the chief executive of the Federal Chamber of Automotive Industry, has said subsequently that he is now ‘‘reassessing’’ the effect of the carbon tax.
‘‘Due to the highly competitive nature of the Australian automotive market, local manufacturers are not able to pass the cost of the carbon price on to cus- tomers and have to absorb it into their already tight margins,’’ he says.
The PwC report, compiled before the carbon tax was introduced, warns that vehicle imports are on the rise and local jobs under threat.
It says imported vehicles accounted for almost 85 per cent of sales in 2011 compared with 60 per cent in 2002, and the number of vehicles from Thailand has doubled in two years.
Local manufacturers have turned to importing components rather than sourcing from local suppliers: 43.6 per cent of components were imported in 2010-11, up from 34.8 per cent in 2005-06, according to the report.
‘‘These challenges have resulted in a reduction in the sales volume of locally manufactured vehicles and a reduction in local content of domestic-manufactured vehicles as the vehicle assemblers have increasingly sourced components from overseas suppliers.
‘‘This has resulted in associated job losses within the Australian industry.’’
Component supplier CMI Industrial is set to close after its receiver announced a prospective buyer had withdrawn. Sixty jobs will be lost when the Ballarat business closes on November 30.
A Commodore SV6, like all Australian-made cars, is more expensive to build because of the carbon tax, Holden says