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Toyota to follow Ford and GM out of Australia

  • Toyota (TM) intends to end the production of cars and engines in Australia by the end of 2017, due to high costs, the strong Australian dollar and low economies of scale.
  • Toyota's move is not a huge surprise after the Japanese company warned about the future of its Australian operations last year following the announcement of similar plans by Ford and GM.
  • The exit by the car companies represents the end of an era for Australian manufacturing. Toyota's departure will hit 2,500 jobs directly, although the auto industry supports over 40,000 workers and 150 supplier companies. (PR)
Comments (10)
  • june1234
    , contributor
    Comments (2330) | Send Message
     
    Cheaper to make em in China. BMW will be opening their first manufacturing plant in Mexico. Aussies can now do what we've been doing for decades, borrow to make up the difference in lost jobs.
    10 Feb, 05:58 AM Reply Like
  • Jiaberg-Sydney-OZ
    , contributor
    Comments (154) | Send Message
     
    1) I live in Sydney Australia and 2 street blocks from a segment of highway with 7 car dealership- Merc, VW, Toyota, Nissan, GM, Mazada, Honda. They also sell Renault-Suzuki by Nisssan and Chrysler with GM. There used to be a Peugeot dealership too. Ford has gone from here a few years back with Mazda taking expanding to the Ford site.

     

    2) There are over 300 different car models in Australia second only to the US market. With 23 million people and about 1.1~1.2 m car sales a year, ask yourself how is that there are 300 car models? How is that car companies could afford such huge range?

     

    3) Simple- HUGE PROFIT MARGIN. After all, a dealership needs to have proper services department. Yes, Nissan-Renualt-Suzuki alliance reduces the cost per model. But not every car maker has such. Mazda, Honda, Toyota, Ford and even GM do not have direct alliances with other names. Without the initial high margins, these dealership would not be able to set up their service departments to cater for over 300 models.

     

    4) So how is Ford Australia, GM Holden (GM in Australia) and Toyota Australia still not able to compete with such HIGE PROFIT MARGIN in general for the whole car industry? Even a 6 year old would ask this question.

     

    5) Why, they have not invested in the manufacturing capacity to upgrade to higher and more efficient technologies.

     

    GM Holden and Ford Australia, in their over 100 years combined in manufacturing in Australia have, between them, 2 years of reporting losses. Where else in any GM and Ford in any region that have only 2 years of losses?

     

    Why only 2? Well, the government subsidies or should I put it in a rude manner, the government has been blackmailed to pay up or otherwise. e.g., GM, in its first ever loss year was given a special tax concession of writing off all of its so-called investment for a new engine which is mainly for export. Yes, instead of 10 years of depreciation, it got the 100% write off in one single year. Without this, GM would never make a loss in its over 60 years of making cars in Australia.

     

    For the last 5 years, between them, the so called Aussie car makers have and still are getting AU$4.5bn in subsidies from the government. Someone did a study, almost all the profits in the last few years for the car making industry more or less matched the subsidies. Indeed the dividend paid to their parent companies have also more or less similar in size to these subsidies in the last few years.

     

    BTW, these AU$4.5bn (or US$4bn) every 5 years have been going on in equivalent amount for decades and not just recently...

     

    6) Back in late 1990s' and 2000, the Aussie dollar was only trading at 50 cents vs US. Ford Australia, GM Holden and Toyota Australia were sitting pretty as the low Aussie dollar was such low level. They did not have to and indeed did not improve much in anything and certainly not a cent for proper capital investment. In late 1990s' and early 2000's, the average age of private cars on Australian roads was just over 10 years old. Yes, we Aussies were mainly driving bombs which the Japanese authorities would force off the road given their regulations.

     

    Since 2006~7, the Aussie dollar has climbed back. It's clear that Ford Australia, GM Holden and Toyota Australia had not bet on this Aussie Dollar rise. They basically waited for other external factors to be in their favour instead of capital investments.

     

    Again over 300 different car models in a market of 1.1~1.2 million car sales a year. By the way, back in 1999~2000, only about 600,000 cars were sold. I can assure you that the Aussie population has not increased by 100% in the last decade.

     

    7) Car making is more or less capital intensive. Modern car plants have low labour force. Those in Mexico and SE Asia have more labour per car made due to the low labour costs. In Germany and other advanced car manufacturing nations, with new factory investment, labour reductions are one process.

     

    Ford Australia, GM Holden and Toyota Australia and the car supply chains in Australia clearly have not made any proper capital investments. I certainly have never heard anything in the fashion that they have announced in other advanced economies over the years.

     

    Come on, if at such huge profit margin for a market like car sale could not save the car manufacturers, it is the car manufacturers that have the problem.......

     

    Would you like to have 300 car models ? I am sure there must be at least 200 models available for me to choose from the car dealerships near me. Yes, I live in a well off part of Sydney, but the story is clear enough, isn't it?

     

    8) I am no auto person, can someone please tell me if Au$4.5b or about US$4bn would be sufficient for the Aussie government to simply construct a brand new car plant with new technology for say 100,000~200,000 units per year? 200,000 cars is about the combined output of Ford Australia, GM Holden and Toyota Australia in this last year. If the answer is affirmative, Australia should simply start its own proper car maker without any tie to anyone else. Every 5 years, there would be a new car factory for OZ here.

     

    9) Good riddance to Ford Australia, GM Holden and Toyota Australia 'manufacturing cars' in Australia.......
    10 Feb, 04:58 PM Reply Like
  • ChiefEngineer
    , contributor
    Comments (147) | Send Message
     
    I wonder how much labor unions mucked this up for the workers.
    10 Feb, 09:39 AM Reply Like
  • june1234
    , contributor
    Comments (2330) | Send Message
     
    which ones? In the Ford plant outside Hermosillo, Mexico , few hours from the AZ border they pay their workers $35 a week, not a day, per week. Not lot of spare cash to fund any union anywhere with that
    10 Feb, 10:56 AM Reply Like
  • mobyss
    , contributor
    Comments (1792) | Send Message
     
    The Ford workers in Mexico make about $8 to $10 per hour.

     

    http://buswk.co/1kw0Znr

     

    I think ChiefEngineer touched a nerve and you responded with a very embarrassing comment. Until global wages/transportation costs normalize, or at least until Ford, GM, and Fiat can get out from under the thumb of the UAW, you'll continue to see them manufacture outside the US for the US market.
    10 Feb, 11:46 AM Reply Like
  • caupachow
    , contributor
    Comments (309) | Send Message
     
    with a ridiculous statement like that one should back it up with a source. So; your source?
    10 Feb, 12:23 PM Reply Like
  • Cerberus
    , contributor
    Comments (200) | Send Message
     
    Its to expensive to build in Oz. As a waiter, I made $20 an hour. That coupled a massively regulated social system equate to a very high cost of doing business.

     

    I think Holden is only staying afloat bc of Aussie support. Nice trucks though, they look like el camino's of the olden days.

     

    No need to borrow money, they are selling the entire lot of raw materials to pay for there 'entitled' system.

     

    Education is cheap though, lifestyle nice, but they still rely on us to defend them in war...
    10 Feb, 10:05 AM Reply Like
  • mrrosenthal85
    , contributor
    Comments (3) | Send Message
     
    Education is cheap though, lifestyle nice, but they still rely on us to defend them in war...

     

    Who is us and who is them?
    10 Feb, 12:42 PM Reply Like
  • Tradevestor
    , contributor
    Comments (4013) | Send Message
     
    http://seekingalpha.co...
    10 Feb, 01:21 PM Reply Like
  • joesod
    , contributor
    Comments (3) | Send Message
     
    australia too expensive now with australian dollar, free trade agreements mean that cheap imports from asia can now be sold in australia. Thats the price australia had to pay in order to have access to the asian markets for their raw materials. Also the booming economy for the last 10 years gave australians an appetite for prestige european cars imported all the way from europe
    21 Feb, 08:49 PM Reply Like
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