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Australia ‘can’t afford three car-makers’

Thin ice: Ford's Geelong engine plant could be a victim of the decline in sales of locally-built cars.

Ex-premier Kennett predicts demise of one Aussie car manufacturer as imports boom

General News logo25 Apr 2011

FORMER Victorian premier Jeff Kennett has predicted the demise of one of Australia’s three local car-makers as Australian motorists increasingly choose imported vehicles.

Mr Kennett, whose Liberal state government was instrumental in securing motor industry investment for plants such as Holden’s $400 million global V6 engine factory in Port Melbourne in the 1990s, said Australia could no longer support three car-makers.

Although he did not name any car company that he thought was vulnerable, he said the closure of any manufacturing operation would have a severe impact on the Victorian economy in particular.

While Mr Kennett no longer has any formal ties to government, his comments on the local industry will still resonate around Victoria where he is remembered for his strong government.

Writing in a commentary piece for Melbourne’s Herald Sun, Mr Kennett said there was no point blaming governments for the decline in Australia’s manufacturing industry, but he called on governments to manage the change.

 center imageLeft: Former Victorian premier Jeff Kennett.

“We Australians have made the decisions ourselves through our buying patterns,” he wrote. “It is better to work in advance of the change when it comes.

“Let’s hope all sides of politics will be equally responsible and try not to score short-term points off one another and offer false hope to all those affected.”

Mr Kennett pointed to the temporary production cuts by Ford Australia’s Victorian factories and the rise of the Mazda3 as the most popular car in Australia, taking over from the Holden Commodore so far this year, as symptoms of the change from locally manufactured vehicles to imports.

“The reality is Australia can no longer support three car manufacturers,” he said. “One will close.”

Mr Kennett said the three local companies Toyota, GM Holden and Ford sold just 146,314 locally-made cars in Australia last year, accounting for just 14.1 per cent of the total market of 1,035,574 new vehicles.

As well, he said the viability of exports might also be challenged by the strong Australian dollar – which he said was predicted to remain high for up to five years – and the impact of a carbon tax.

“Nor is it likely the government will take action through higher taxation on imported vehicles or higher tariffs to ‘direct’ us to buy locally-made vehicles,” he said.

“Therefore, this is a particularly hard environment for our manufacturers. Something will give before too long.”

Mr Kennett said the motor vehicle industry had received millions of dollars in federal and state government assistance to encourage the development of new models in Australia.

“But there is no justification for further subsidies,” he said. “The ‘Buy Australian’ cry only goes so far, as we witness with food, clothing, footwear and cars.

“Australians are increasingly buying on the basis of their sense of value and quality.

“I believe the trend away from locally made cars will continue. Having said that, we should work with the industry to manage that change in a mature fashion.”

Mr Kennett said change was all around and happening at a faster pace, and not just in the motor industry.

“But when one door closes, another opens,” he said.

Mr Kennett became Victorian premier when his Liberal Party, in coalition with the Nationals, won the 1992 Victorian election in a landslide.

He ruled through two terms, making major changes to Victorian infrastructure and public policy on what became known as the ‘Kennett Revolution’. Among his legacies are the Citylink freeway project and the Australian F1 Grand Prix at Albert Park.

He was ousted as premier in 1999 when he the Liberals were defeated by Labor led by Steve Bracks.

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