Industry: Tax, Tariffs Moot as Oz Auto Making Ends

The Australian auto industry is calling for the removal of two vehicle taxes with the looming end of local manufacturing.

Federal Chamber of Automotive Industries CEO Tony Weber says the import tariff and the luxury-car tax should go.

Ford is terminating production in 2016, followed in 2017 by GM Holden and Toyota.

“Post- (local) manufacturing, there is no rationale to maintain the 5% tariff on imported motor vehicles,” Weber says in a statement. “This will increase competition in the market. Similarly, the removal of the Luxury Car Tax would also increase competition in the market.”

The FCAI proposal is backed by the Australian Automobile Assn., which calls for an immediate end to vehicle tariffs as a way to improve motoring affordability.

“With local manufacturing coming to an end, it is only fair that tariffs on imported vehicles must also stop,” AAA CEO Andrew McKellar says in a statement.

Nine out of 10 new vehicles sold in Australia during 2013 were imported.

“If tariffs were designed to help protect the local industry, then there is no longer any justification to maintain them,” McKellar says.

He estimates removing the tariffs could save the average buyer A$1,000 to A$2,000 ($903 to $1,806) of the cost of a new vehicle.

Meantime, organizers of the March 11 “The Cars of Tomorrow” conference in Melbourne say while things look bleak for the Australian automotive industry, there still is hope for the country’s talented and innovative engineering and design teams.

The conference will feature high-level keynote speakers from around the world to discuss how Australia can exploit its strengths and influence the design of motor vehicles globally.

The conference will be underpinned by a discussion by Neville Jackson, deputy chairman of the U.K. Automotive Council Technology Group, on how that region’s once-ailing automotive industry successfully transformed itself over the past 15 years.

He will tell the conference that by following a “whole of government and industry partnership” approach, and by shifting from high-volume, low-value production to high-end, high-technology design and manufacture, the U.K.’s automotive industry has been able to reposition itself as a premium-vehicle producer, behind Germany.

The conference is being hosted by the Melbourne-based Auto Cooperative Research Center; Future Climate, a group established to assist government, business and individuals deal with global warming; and the Society of Automotive Engineers Australasia.

Organizers say that as with the U.K., Australia cannot produce some components as inexpensively as they can be produced in other countries.

Similarly, however, Australia also has a pool of talented and highly skilled workers, who excel in areas such as R&D, design and high-end, niche manufacturing, they say in a statement. “One of the challenges for the automotive industry and Australian government will be how to foster investment in these valuable assets to ensure they don’t disappear.”

Volker Richter, BMW vice president-vehicle architecture, will discuss development of the German automaker’s City Mobility Concept. The GM Holden Design Studio will make a presentation on the look and feel of the future, from design theme to production.

Discussions of how the Australian auto industry can reinvent itself for the future will include sessions on innovation, automotive safety and technology, the global supply chain and overseas opportunities.

Elsewhere, Gas Energy Australia Director and CEO Mike Carmody says developing world-class production facilities for cars powered by liquefied petroleum gas in Australia will create jobs and ensure high-end auto technology and skilled workers stay in the country.

Carmody says a plan developed by Gas Energy Australia and the Victorian Automobile Chamber of Commerce presents an immediate opportunity for the federal government to invest in a niche industry that will be driven by innovation.

“We propose to develop three state-of-the-art facilities in Victoria and South Australia where brand-new cars would be converted to LPG, initially employing around 500 people,” he says. “We would use the same production methods being used in the U.S. and Europe to deliver economies of scale and give motorists a much broader range of new gas-powered cars to choose from.”

An LPG vehicle Center of Excellence would be created as part of the plan. Focused on R&D, the center would make use of skilled labor that will be displaced as conventional car manufacturing in Australia comes to an end.

Carmody says the country has an abundant supply of LPG, national infrastructure, leading-edge technology and skilled labor. “Now is the time to use that advantage to create long-term sustainable jobs, and retain our advanced auto technology knowledge and experience.”