Sales Down Under once again are over the top as Australia enters the homestretch toward another record year, with the country's vehicle manufacturing group forecasting an all-time high of 960,000 unit sales for 2004.

The often-overlooked Asia/Pacific market has set a sizzling sales pace for three consecutive years and now finds itself near the top of many global auto makers' playbooks, particularly in light of proposed free-trade pacts with both the U.S. and the Association of Southeast Asian Nations (ASEAN).

The industry reported a record 710,247 new-vehicle sales in the year's first nine months, up 5% on the previous high set in 2003, establishing benchmarks for September as well as the third quarter. Sales were helped by a host of new models.

“Motor vehicle demand is generally a barometer of public confidence, and right now it is at an all-time high,” says Peter Sturrock, CEO of the Federal Chamber of Automotive Industries. “It would appear that the mood of the Australian people is very positive and very buoyant.”

The same could be said for OEMs, which see a shift away from predominately passenger cars to more-profitable SUVs. While passenger-car sales have fallen less than half of 1%, SUV demand has jumped 15%.

Australia's Big Three offerings account for 97% of the growth in the medium SUV segment, which by August had risen 50%. They include the Ford Territory, Toyota Kluger and Holden Adventra.

As year-end draws near, Toyota Motor Corp. Australia Ltd. continues to dominate sales, outpacing rivals General Motors Corp.'s Holden Ltd. subsidiary and Ford Motor Co. of Australia Ltd. Toyota in September owned 21.2% of the market, compared with Holden's 18.6% and Ford's 14.1%.

Toyota in July opened a $36 million regional headquarters in Australia in anticipation of the upcoming ASEAN free-trade agreement (FTA) that eliminates tariffs for the import and export of parts and vehicles.

ASEAN leaders were to meet Nov. 30, and FTA negotiations should begin next year. “The FTA will allow us to expand sourcing to neighboring countries at the lowest cost and stable quality,” Toyota Motor Corp. President Fujio Cho says.

The timing of the U.S. FTA is less sure. Both countries reportedly have passed legislation enabling the pact to take effect Jan. 1, but neither has certified that the other's laws comply with the free-trade deal.

GM has tapped Australia for its Pontiac GTO (based on the Holden Monaro) and soon will source a new global V-6 variant from Holden's Port Melbourne plant. The DOHC engine with variable valve timing bows in the '06 Saab 9-3, producing 250 hp.

No.1 in car sales, GM may bring Cadillac and Hummer vehicles to Australia. DaimlerChrysler AG (Crossfire), PSA Peugeot Citroen (407) and Volkswagen AG (New Golf) all launched new models this year.

Ford, meanwhile, says sales are exceeding expectations. Ford Australia President Tom Gorman credits the government for doing a “brilliant job” managing the economy.

“Low interest rates and an absolute flood of exciting products (are) driving demand,” he says, noting he expects sales of the new Territory to settle in the 2,000-unit-per-month range.

Ford Australia plans to spend more than $14 million to build a new product engineering and development center in Geelong, Victoria, to be completed in 2006. Gorman says the facility is needed for an increasing number of design and engineering projects for the Asia/Pacific region.

The only cloud on the horizon is Mitsubishi Motors Australia Ltd., which was forced to close its Adelaide assembly plant for the last two weeks of September to reduce the stockpile of unsold vehicles. The plant has been operating on a 4-day week as the result of weak sales.

The auto maker's lowest point came in May, when major fleets backed off after the company announced the future closure of its engine plant in 2005.

Corporate parent Mitsubishi Motors Corp. has endured a tumultuous year of scandals and financial crisis that have had a negative effect on its Australian subsidiary, whose sales fell 25% in the first eight months to 36,997 — in a market running at a record pace.
with Alan Harman in Canberra