Australian car assembly industry doomed

Australia’s car assembly industry will not survive the economic recession, and Holden will probably be the first to go, says the car buyers’ Dog & Lemon Guide.

Editor Clive Matthew-Wilson said today:

“Holden’s owner, General Motors, is teetering on the edge of bankruptcy. The U.S. government will rescue the parent company in order to protect American jobs, but there’s no way the American government is going to rescue Australian jobs.”

Holden has recently halved production at its South Australian plant and Matthew-Wilson believes that this slowdown is the beginning of the end.

“Australia’s car factories are losing money on every vehicle they make. No amount of incentives from the State and Federal governments can solve this basic problem. It’s not a matter of whether they close down, but when they close down.”

Matthew-Wilson believes Holden will be the first to go, followed by Ford and then Toyota.

“People falsely believe that Ford is doing okay. That’s not true. American Ford’s sales are down 43% in the first quarter of this year. Ford is losing billions just like GM; it’s just that Ford arranged private sector finance before the recession, so it’s not quite so obvious how serious things are.”

“Australia’s only other manufacturer, Toyota, is globally facing its first annual net loss in 59 years. How long do you think Toyota is going to put up with losing money by assembling cars in Australia?”

Matthew-Wilson believes that the State and Federal governments’ multi-million dollar assistance to Australian car companies will simply be wasted.

“Globally, there’s a glut of new cars at bargain prices, yet Australia, which produces a small number of high cost cars, is trying to compete with countries like China, which produces ten million cars a year and pays its car workers as little as one dollar per hour.”

“The Australian government can throw $6 billion or $600 billion at these car plants, but they still won’t be economically feasible. Australia’s car plants are losing money faster than a drunk at a casino and there’s no feasible way of turning this around. The Australian car industry can re-focus on small cars, green cars, blue cars or red cars. None of this will make the slightest difference.”

Matthew-Wilson believes the government money would have been better spent by giving it to the affected car workers.

“If the Australian government simply shared its $6 billion car industry bailout among the affected car workers, these workers could pay off their mortgages or perhaps start small businesses. At least that way the money wouldn’t be wasted. As things stand, the government’s $6 billion is simply paying the bills for a few multinational corporations, while doing nothing to solve the underlying problems.”

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