The Australian Automotive Industry

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Table of Contents

Conclusion
Works Cited
Footnotes

The development of the Australian automotive industry was prompted its proximity to other car-making countries, which meant that it would be sensible if it manufactured their own automobiles. Herbert Thomson and Edward Holmes from Armadale, Melbourne, are credited for developing the first real Australian car in 1896, which came to be known as Phaeton. The Phaeton, a one cylinder steam carriage with energy displacement of 5 horsepower, made its maiden trip a distance of 493 miles at an average speed of 8.7mp/h¹.

Harley Tarrant followed 5 years later with an invention of his own petrol-driven automobile, the first in Australia. Tarrant’s vehicle was powered by a Mercedes engine fitted on its posterior end which had the energy boosted to 6 horsepower. Thereafter, Tarrant’s automobile was followed by better designs that revolutionized over time.

The spare parts of these later designs were manufactured locally. From 1926, the automotive industry experienced tremendous development which it had never experienced before by attracting investors and keen scientists. In 1929, J. F. Crosby, an investor and entrepreneur, spotted the industry and invested heavily in Eclips Motors pty Ltd, which in turn bought Standard motors. This was later on changed to Tablot and Standard Motors.

The industry experienced more changes in the years that followed which saw the demise of small manufacturers from the scene as the big industrial leaders reinforced their hold by buying out the small scale manufacturers. The favorable tariffs that were adopted in the industry played a critical role in helping the automotive industry in Australia grow, expand output and increase employment within the industry even into international scenes.

In the case of Australia, the tariff rates charged on automobiles imported from other countries into Australia were high thus discouraging the importation of cars from other countries into Australia as they more expensive comparative to the vehicles manufactured locally. This led to the locals preferring to source the vehicles locally at a cheaper price as opposed to importing the same vehicle at higher price.

This could only lead to expansion of the local automotive industry thanks to the tariffs that had been imposed by the Australian government. The Australian government also subsidized locally produced cars and their components hence making them affordable to the locals.

This policy gave the local manufacturers a competitive edge over their competitors. Besides having an added advantage to their competitors, the local manufacturers’ vehicles experienced an increase in the sales of their cars which prompted them to increase the number of employees in their assembly firms.

This led to a cyclical effect of some kind, that is, by employing more people in the automobile industry and hence more people became economically empowered. These were the same people who provided market for the vehicles that they were manufacturing and hence there was an expansion of the Australian economy as a whole².

However, the liberalization of trade led to the vulnerability of the local automotive industry to competition from imported vehicles. The liberalization of tariff and non-tariff trade policies in Australia by the Australian government was necessitated by the collapse of (WTO) Doha Round trade negotiations³.

Currently, a lot has changed in Australian automotive industry due to trade liberalization by the government which has now shifted its attention to trade as opposed to protecting its local industry. 80% of its domestic sales are imported and a half of its locally manufactured cars are exported. Exports have continued to rise over the years reaching an estimate of $5.8 billion by the end of the year 2008⁴.

Automotive tariffs have dropped to 5% in the year 2010. This is because the Government has shifted its focus on free trade agreements with special Interests in countries such as Japan, China and the gulf area. Their priority is to penetrate other markets for Australian automobile industry.

The main interest of the Australian government is to enter developed markets such as the Middle East and the United States of America. The four main automobile manufacturers that make up Australia’s automotive industry are Toyota, Ford, Holden and Mitsubishi. These four companies mainly produce passenger motor vehicles and commercial automobiles. In Australia, there are a total of more than 200 automobile component producers.

Locally manufactured vehicles account for a significant percentage of the domestic sales in the Australian motor vehicle industry. There is a huge demand for vehicles as years go by particularly in the year 2003 where the overall sales of vehicles reached an outstanding record of 9909811 units.

A strong supply chain gives immense support to the Australian automobile industry where there is a refined production capacity in sectors such as exhaust systems, rear axles and also air conditioning. This industry has a total of 500 companies that provide auxiliary services and tools to vehicle manufacturers⁵.

Conclusion

The Australian automobile industry has really revolutionized over the past century since it was born in the early 1900. A key factor that has greatly influenced the growth of the Australian automotive industry is the Australian government. The government implemented favorable policies that gave the industry an opportunity to operate competently and viably in both the local and international markets.

With the coming into act of the World Trade Organization tariff policies and subsidies, the local market has really been flooded with foreign car models and these have eaten into the local manufacturers revenues and heightened up competition. However, the Australian automobile remains vibrant and ever growing.

Works Cited

Anderson, Peter. “ACCI Welcomes textiles and car tariff cuts (ACCI media release 003/10)”. Acc.asn.au. 1 January 2010. Web.

Australian AMC production data. “Aussie AMC Rambler thread”. The AMC Forum. 2008. Web.

Australian Bureau of Statistics. “1309.0 – Australia at a Glance, 2008”. Abs. 7 February 2008. Web.

Productivity Commission. Trends in Australian Manufacturing, Commission Research Paper, AusInfo, Canberra. 2003. Print.

Stubbs, Peter C. The Australian motor industry: a study in protection and growth. Cheshire for the Institute of Applied Economic and Social Research, University of Melbourne, 1972. Print.

Footnotes

¹ See Anderson, Peter in his article, “ACCI Welcomes textiles and car tariff cuts (ACCI media release 003/10)”, for more details.

² Stubbs (13) explains the revolution of the Australian automobile industry

³ Details from the Productivity Commission website.

⁴ Australian AMC production data website.

⁵ See Australian Bureau of Statistics website for more details.

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The Australian Automotive Industry

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