The Australian Automotive Industry Economics Essay

It all began in 1897 where Harry A.

Tarrant of Melbourne produced the first gasoline powered auto in Australia. This fabrication by Harry A. Tarrant opened up the Gatess in the Automobile industry for Australia and in 1903 the Australian Motoring Association was formed to protect the rights and involvements of automobilists across Australia. However at this phase in clip the car industry was still comparatively tamed as it was expensive to bring forth autos and it was n't until American Henry Ford established a radical production assembly line which was able to bring forth autos cheaper and more expeditiously so that now the norm family could buy a auto.As the U.S and other states began to see Australia as a possible market due to the big geographical size and dependance on conveyance, a inundation of autos was imported into Australia.

In 1917 there were 15,000 autos imported, this consisted of 10,000 Ford theoretical account T, 2,300 Contrivances, 1500 Buicks and 1200 others ( Technology in Australia 1788 - 1988, n.d. ) .The Australian authorities saw immense potency for occupation creative activity and skill keeping in the automotive industry and hence because of the big inflow of imported autos the Australian authorities imposed imposts responsibility and duties on imported autos to promote local fabrication. In 1924 records show that there were 102 different types of autos of which 40 % originated from United Kingdom, 10 % Europe and 50 % from North America. In 1920-21 there was one vehicle to every 50 people but by 1929-30 there was one vehicle between 11 people ( Technology in Australia 1788 - 1988, n.

d. ) .The success of the authorities 's policy of enforcing a revenue enhancement was shown through the production of autos in Australia which went from a few thousand in 1918 to around 90,000 in 1926-27. This was due to houses get downing their ain production workss such as GM-Holden and Ford.Ford Australia was established in Geelong 1925.

This was one of the first and major auto production workss in Australia and focused on bring forthing the iconic Ford Model T. Many Australian farming communities were doubting at first utilizing autos for work responsibilities as they did non get by good with the unsmooth terrain and farm life style.Therefore in 1934 Ford Geelong produced the universe 's first public-service corporation vehicle. This design was monumental for the automotive industry and besides the economic system as the public-service corporation vehicle began to be to a great extent exported to abroad states. Short old ages subsequently in 1926-27 more companies decided to put in Australia such as GM-Holden, Chrysler, Volkswagen and the British Motor Corporation which they all installed imperativenesss and began fabricating.Soon came the Second World War and A vehicle makers were forced by the authorities to bring forth a scope of defense mechanism demands, from sea grenades, set downing trade, aircraft back up fuel armored combat vehicles, to armor assaultive vehicles.

This had a negative impact onto non merely the car industry but the economic system every bit good. Post war the Australian car industry invited motor companies to fabricate in Australia at a high degree of local content ( 90 % ) in return for quota and duty protection ( Technology in Australia 1788 - 1988, n.d. ) .

To retain the accomplishments of people developed in the war and to increase occupations.Through dialogues with GM Holden and Holden Australia the first 'Australian ' Holden was manufactured in 1948. Holden Australia now had a license to mass green goods in its place state and rapidly put up big assembly lines. The Holden auto had a major impact onto the Automotive Industry as it set its monetary values a batch lower than its rivals coercing rivals to bring forth efficient and better autos for the consumer, but besides Holden was widely accepted around the universe and this increased the exports dramatically in the Australian Automobile Industry.From so on the Automobile industry boomed in Australia due to the quickly lifting population and incomes. New enrollments of rider vehicles averaged at 74,000 in 1950 increasing to 160,000 in 1955-7 and 302,000 in 1962-64 ( Technology in Australia 1788 - 1988, n.

d. ) .Aid provided by the Australian Government for the automotive industryOver the old ages, the Australian Government has protected the Australian Automobile Industry in many ways such as minimal degree of local content demand, import quotas and duties on foreign vehicles ( Australian Bureau of Statistics 2005 ) . This aid to construct up the local car fabrication industry over the twelvemonth as bounds competition from external forces. However, these over protection has failed in assisting the industry grow healthily as it is uneffective in doing the industry competitory against the foreign market which is big and strong.

Therefore, the aids provided by the Australian authorities have easy been decreased to assist the local industry adapt to the fight of the planetary market. Import quotas were cut down to 20 % in 1984 and wholly terminated in 1988. Tariffs which used to be every bit high as 57 % in 1984 were besides easy decreased by 2.5 % per annum get downing 1990 until it reached 15 % in 2000. The duties rate continues to drop from 15 % to 10 % in 2005 so to 5 % in 2010 ( Australian Bureau of Statistics 2005 ) .

Presently, the duties rate maintains at 5 % and there are besides 0 % duties on car imports from certain state like Thailand due to the Free Trade Agreement ( Nuguid 2012 ) .Enforcing high trade barriers for foreign maker has provided the local car industry with comfy protections which makes it uncompetitive in the planetary market as they rely excessively much on the authorities. That is the ground why the authorities has easy been cutting down the quotas and duties to maintain the local automotive maker remain competitory and at the same clip, pulling foreign investings. Despite that, the authorities stills provide helper to the local maker in one manner or the other ( such as budgetary aid ) , to give them an upper manus in the market and supplying them infinite to turn strong for the planetary market.One of the newest aid given by the authorities is the execution of `` A New Car Plan for a Greener Future '' program ( Government enterprises and aid n.d.

) . The aim of this program to assist the Australian auto industry in the research and development sector to bring forth low C emitting vehicles which will besides strengthen the local supply concatenation and increase foreign investings. The Australian Government had prepared to put a sum of $ 5.4 billion dollar in this program.Other than that, there besides exists some indirect aid for the local automotive industry such as authorities buying penchants and prohibitory duty on second-hand vehicles ( Current aid to the industry n.d.

) .The ground Australia should bring forth its ain carsAustralia decidedly should bring forth its ain cars because the industry has helped better the state 's economic system, maintain an optimal employment rate, and hike engineering and invention betterments ( Australian Automotive Industry n.d. ) .The Australian Automobile industry has a great impact unto the state 's economic system has it enable the authorities to derive more income through revenue enhancement unto these cars such as duties responsibility, cast responsibility, luxury auto revenue enhancement etc. It besides helps to change over other trade goods such steel and electronics into value-added merchandises and export them to the universe.

In 2011, $ 3.3 billion were generated from the export of motor vehicle ( $ 1.7 billion ) and automotive constituents ( $ 1.6 billion ) throughout the universe ( About the Automotive Industry n.d.

) .With over 100,000 concerns over the assorted sector of fabrication, logistics, retailing and service, the industry provide employment to about 400,000 people in the state ( Australian Automotive Industry n.d. ) with 55,000 people, in the fabrication sector entirely ( About the Automotive Industry n.d. ) .

The accomplishments needed in car industry has helped produced sophisticated work force out of the Australian workers through instruction and preparation. As a batch of researches are needed to do betterment in the vehicles, intensive attempts has been put frontward which at the same clip benefits the whole economic system as the invention produced aid better other sector of the state such as heavy technology, aerospace and Marine ( About the Automotive Industry n.d. ) .

The research and development done has helped Australian maintain as an advanced state.The ground Australia should non bring forth its ain carsAustralia 's car industry has everlastingly been under protecting from the Australian authorities, this is the ground why it still exists today. For this ground is why Australia should non bring forth its ain cars. This aid which the authorities gives to this industry could be distributed elsewhere within the Australian economic system. Through the 'A New Car Plan for a Greener Future ' strategy ( Government enterprises and aid n.d.

) the authorities will be puting out $ 5.4 billion dollars ' worth of aid. This program was initiated in 2011, with great expectancy, now a twelvemonth subsequently Ford has come out to denote it will cut down its work force and production as the house tries to get by with the force per unit areas of worsening large-car gross revenues and lifting Australian Dollar ( Davidson 2012 ) . Ford stated that this was due to an accretion of 40 old ages of automotive policy failures ( Davidson 2012 ) . This statement expresses how it has non merely been the recent times of adversity which has resulted in these cuts, but many old ages of hapless policy picks.

Ford being one of the biggest makers in the automotive industry in Australia, the consequence of them relocating there mills would be damaging to the industry and perchance the terminal for it. The fact that Ford has cut occupations and production, even after the authoritiess push to hike the industry with the 'New Car Plan for a Greener Future ' shows that it is non feasible for Australia to go on to shoot the industry with such programs as these ( deserving $ 5.4 billion dollars ) , when it is non conveying good results ( Current aid to the industry n.d.

) . This money could be used for sectors of the economic system which are genuinely needed so that our state can go more productive. Education could profit greatly from these financess, besides assisting us export this service which we are among the best at making. Besides earlier in the twelvemonth Toyota cut 350 occupations from their Altona works, this is another illustration of the jobs our auto industry is confronting ( Drill & A ; Winslow 2012 ) . The intent of inducements and subsides is to maintain concerns finally up and running, and non cut down in size or production. Though this is what we are go oning to see, intending something is non right with these policies which continue to alter and protect the industry.

As The Economist, noted in 2011, that there is a excess production of 30 million autos over the universe ( Danger Ahead 2011 ) . From the 30 million units, it is incredible that Australia merely builds every bit few as 250,000 vehicles per annum. During its peak old ages during the past decennaries, bring forthing a upper limit of 400,000 vehicles it still does non do Australia a `` mass market maker '' in planetary footings. Merely a maker that builds over 500,000 vehicles per annum can be defined as a `` mass market '' auto shaper ( Danger Ahead 2011 ) .

DecisionEven though the Australian automotive industry may be the Australia authorities a batch to keep, it is important for our economic system to last and come on. Davidson ( 2012 ) said that, 'In fact no state has of all time become a developed industrial economic system without an car industry. Not even Switzerland. From Belgium, to the Netherlands, to China, the employment, accomplishments and export potencies associated with auto production are tremendous. ' This fact expresses the importance of keeping this industry, besides the occupations it creates indirectly linked with auto fabrication, such as logistics, and disposal.

The authorities should revise their program and come up with a more strategic solution that will keep this industry 's fight and advantages while at the same clip, does non discourage foreign investors which besides benefits the state.