It is a 20-hour plane ride from Detroit, yet the coastal city of Melbourne seems strangely familiar. Maybe it's because this is Australia's own Motor City, albeit with a warmer climate, smoother roads and decidedly European feel.
Melbourne, Victoria, is home to Holden Ltd.,Corp.'s Australian unit; plus Motor Co. of Australia Ltd. and Motor Corp. Australia Ltd.
And just next door, by Oz standards, is the state of South Australia, whereMotors Australia Ltd. has its headquarters near the city of Adelaide.
Still, it may surprise that Australia boasts 55 different brands, including Citroen,and Ssangyong, plus an astonishing 350 nameplates. Not only are vehicles sourced from 20 different countries, but also a recent ACNielson study finds Australia is per capita the second-largest car-driving nation behind the U.S.
“It's a staggering number of (available) vehicles,” admits American Tom Gorman, who has been at the helm ofAustralia for a year. “This market is a very free and open market.”
Passenger cars and SUVs are being snapped up at a voracious rate, with the country having set its third-consecutive annual sales record in 2004, delivering 955,215 vehicles, and well on its way to an anticipated 1 million units this year.
Low inflation and interest rates, high consumer confidence and the move to a goods-and-services tax have helped push market growth to a feverish pace. Industry sales rose 23.6% between 2002-2004.
And while the lion's share of Oz sales are being driven by a newfound appreciation for SUVs — mimicking the U.S. — American visitors are reminded they are not in Kansas by the “roo-bars” mounted on the front of vehicles to cushion collisions with kangaroos.
Although Australia's overall volume pales in comparison with the U.S., Japan and Europe, automotive companies haven't shied away from investing in the distant land.
“I think this idea of why does Australia perform as well as it does ‘automotively’ is something we really struggle to encapsulate, because it is quite intangible — we do punch above our weight,” says Jane Ward, of Victoria's Dept. of Innovation, Industry and Regional Development.
Ward, whose task is to lure automotive investment to the region, says visitors comment on the lack of formality and hierarchy they find and how it, “frees up people's thinking a little bit. Work that would have taken 12 weeks to turn around in Germany at a cost of ‘x’ gets turned around here in six weeks at a cost of half that,” she says.
Max Gillard, vice president and chief operating officer at's new technical center near Melbourne, believes the hospitable automotive climate can be traced back to this young country's pioneering days.
In Australia, auto makers must approach things differently, says Gillard. “Like: ‘We don't have the money; or we don't have the supplier that can make this, so how are we going to do it differently?”
Gorman concurs, pointing to the small volume of Ford's hit Australian SUV, the Territory. “(We sell) 25,000-30,000 a year. We have to be able to design and develop more efficiently if (we're) going to survive at that low of a volume level.”
To cut costs and still offer customers more choice, Holden is producing a whopping 54 derivatives off 14 models — all based on a single architecture — at its Adelaide manufacturing plant; essentially doing what major auto makers would like to do in other markets: building to order.
GM is so enamored with Holden that it selected the unit's engine plant in Port Melbourne as one of just four locations worldwide to build the auto maker's new global V-6 engine.
By the same token, Ford Motor Co. is beginning to take particular interest in its Australian subsidiary, Gorman says, in large part due to the success of the Territory.
“(The Territory) really lifted our visibility, if you will, within Ford in terms of our engineering capability,” he says.
Yet, Gorman sees Ford Australia's greatest opportunities not in North America but in Asia/Pacific, owing to the “staggering” potential growth of region.
The opportunity to export intellectual capital is greater, “in terms of designing and developing products to be used by other affiliates,” than the opportunity to export vehicles, he says.
But although Ford only exports 8%-10% of the vehicles it builds in Australia, Toyota exports 60% of the Avalon and Camry models it produces annually at its Altona plant, with the majority headed to the Middle East. Australian sales of the two account for 50,000-55,000 units annually.
The combined sales of those models, plus a raft of imports, helped Toyota Australia last year become the first domestic auto maker to sell more than 200,000 units (201,737) in a single year, earning it the No.1 spot in overall sales.
As a result of its good performance, Toyota is taking a lead development role for the next-generation Australian market Avalon.
Holden is exporting its Commodore sedan, the best-selling car in the country for nine years running, to the Middle East, where it is sold as the Chevrolet Lumina. And Holden famously ships a left-hand-drive-version Monaro sport coupe to the U.S. badged as the Pontiac GTO.
Suppliers contribute meaningfully to the domestic industry's success.
Gillard says that, unlike the U.S., in Australia there is no difference between a Ford and Toyota supplier.
Yet, some things don't change. Auto makers push their suppliers hard to meet cost targets, Gillard says.
When it comes to finding qualified employees, Gillard says Australian engineers are quite loyal, and the competition here is not as fierce for highly skilled engineers as it is in the U.S.
From an executive's perspective, the same comfort level holds true. Gorman says the small size of Ford's Australian operations makes his job a lot easier.
“I have one assembly plant; I'm a 45-minute drive from the rest of my manufacturing footprint; and I can walk and see every engineer,” he says.
“Most of our key suppliers are a stone's throw away. To get a supplier to come to our quality meetings is pretty simple."