The Demise of Automotive Production in Australia

The production of vehicles in Australia comes to an end in the third quarter of 2017. Before this closure, the three major car manufacturer Holden, Ford and Toyota were active in the country that was giving a big economical advantage to Australia. This comes to an end when all three motor giants stop producing vehicles on a large scale. As a result of these terminations, there is a big loss occur in employments. It was a noticeable unemployment loss in vehicle producers and loss of employment in the supply chain. After this shutdown, the most affected areas Melbourne, Geelong, northern Adelaide likely to bear long-term joblessness for decades to come.

The Demise of Automotive Production in Australia – When & How?

Ford stop producing vehicles in 2016 and then in October 2017, Holden terminated its production and leave 2500 people jobless. It happens after 100 years of production of the vehicle by Holden in Australia. Before all three motor giants, Mitsubishi was the first who stop producing cars in Australia. It was the first time for Australia that a vehicle producers Mitsubishi stop working on cars produced in the country.

History of Demise of Production Industry in Australia

It was 2004 when the first factory in Adelaide stopped producing vehicles and closed. Then it was 2008 when Australia suffered in great loss in employment and thousands of cars producers became jobless. The major company of vehicle production, Ford announced in 2013 that it will terminate its production in 2016.  After the announcement, they reducing the company’s staff that was 1200 staff in numbers. At the time of XR6 declination, 600 workers were working in the factory.

In the same month of October when Ford stops producing vehicles in Australia, before a couple of weeks, Toyota and Holden also closed their plants in Melbourne that make 2500 people jobless When the government asks for closure, then Toyota blame Australian dollar for this closure. According to them, they cost high while getting low economies. The other reason for this demise of production in the automotive industry of Australia is mentioned here.

End of Forecasted Record

The measurement that has been taken for the future years by the vehicles manufactures were not the same. So, according to Toyota, there was an issue inside the Australian car manufacturers industry which was leading to economic loss for every car manufacturers. The Australian taxpayer had been funding for the last 10 years at the time when Holden closed its production. The industry itself was investing heavy amounts for the survival of the car production industry in Australia. This was the first reason that the industry was not more maintainable by the major manufacturers.

Unhappy Importers

Australia was not making good deals for car importers that was another reason for the industry’s loss. In 2017, 77 percent of new products was made in 2017 that was tariff-free. Here is an example of 2005 agreement with Thailand that was a tariff-free agreement of vehicle exchange. At the same place, Thailand maintains its fee for car registration. In this agreement, Thailand started production of vehicles and in a result over 2 million vehicles imported to Australia and 100 Ford vehicles imported to Thailand that was another big loss for Australia.

End of Sedan Cars

The consumer in Australia was preferring V6 and V8 cars for a very long time. But it remains the same and manufacturers didn’t notice any change in the consumer’s profile. The demand for the vehicle remains the same for many years. Then SUVs and small engine vehicle gained the popularity and left the roaring engine off from the consumer’s list. It was another big reason for the loss in production.

Labor Cost

Labor cost in Australia is cheaper than other countries because it is surrounding with many developing countries. A local manufacturing worker cost is $250 K. While a worker in Thailand get a salary of $9 K. So the prices of cars kept relatively low to meet the requirements. Now, most of the vehicles came from Japan, Thailand, and Korea that are fully converted in small engine and the SUVs.

So the country is facing an uncertain situation that is very difficult for the economy of Australia. With the reduction in automotive production in Australia, many factors of life are being affected. This decline in the automotive industry is becoming a role model for other industries too in Australia.

All the vehicles of Ford, Holden or Toyota are being replaced by Kia’s vehicles. In coming years, there may be no vehicle of theses mentioned manufacturers. These are the basic reason why the automotive industry is declining day by day. The demise of the automotive industry is not only affected Australia but the importer’s countries too which are struggling to access different imports to the country. The major vehicle motor giants are the reason for decreasing vehicles production in Australia.