Australia’s Car Industry Bracing For Pull-outs

The Australian car market is said to be one of the most competitive in the world, but some players in the industry, particularly foreign brands, are said to be winding down and cutting back on its operations, as profits continue to shrink and price competition has been affecting businesses.

Opel Australia is one of these companies who have decided on to leave the market, and there are speculations brands like Daewoo, Hummer, Daihatsu and Saab are doing the same. With over 60 car manufacturers in Australia, and with 350 different car models to choose from, it certainly is a competitive market.

Holden, in the meantime, has also decided not to laugh the American Cadillac in the country, sighting challenges with General Motors as well as the domination of German car brands in Australia.

It should be known that Seat, a Spanish car company that belongs to the Volkswagen Group, is also having a tough time in the Australian market. The company has since departed more than a decade ago, following a short Australian stint.

A high ranking official from the car industry said, “The reality is that in a purely competitive market, there’s always going to be someone at the margins – that’s just the nature of markets.”

“If you go back to the 1980s, you had tariffs of 57.5 per cent, you had quotas and you had a floating dollar at 50 cents.”

“Put those things together today and you have an effective tariff at about 3.5 per cent, you have a dollar that’s been, in recent times, over parity for the US dollar for extended periods of time … it’s very open.”

Established brands are also having a hard time due to market competition. Mitsubishi has posted a $34.7 million lost, despite a profit of $23,1 million. The company reportedly only sold 3000 more vehicles compared to last year.