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China the new frontier, says Carr

Spark up: The Australian car industry should not fear China, says minister.

Look to Chinese car-makers for opportunities, minister urges industry

General News logo28 Jun 2010

THE Australian automotive industry should look to the Chinese automotive industry as an opportunity, not a threat, federal industry minister Senator Kim Carr said today.

“We are not only importing parts from China, we are exporting to China, gearboxes, for example,” he said.

Speaking at Ford Falcon 50th anniversary celebrations at Ford’s Broadmeadows plant, Senator Carr said Chinese vehicle manufacturers wanted to move their products up the value chain as rapidly as possible, and that Australia was a good place to obtain a lot of the advanced technology they needed to do that.

“That’s why the department (of innovation, industry, science and research) went to China earlier this year and signed five separate agreements with major automotive manufacturers.”

Senator Carr said the companies included Shanghai Automotive, Chery, Geely and Dongfeng.

Geely has already invested in Australia, buying up the Albury DSI transmission plant that had been forced into receivership when a major customer, Ssangyong, ran into financial trouble.

“The Chinese want to move up the value chain very quickly and build up their industry quickly.

“They want to transform their product range from lower quality, lower cost range to one that is more technologically advanced,” Senator Carr said.

They would be able to do that by tapping into Australia’s “extensive capabilities”.

“Whether it be batteries or drive train or whatever, there are many capabilities they want access to.”

He said the Chinese were prepared to tap into Australia on the basis of proper discussions.

Senator Carr said any extra business the parts-makers could win with China would benefit the local car-makers while maintaining manufacturing in Australia.

However, while the department was working on lifting exports to china, it was also fighting a rearguard action to prevent further erosion of sales to Middle East markets, where Toyota and Holden have had success over the past decade.

Senator Carr said Australia exported a substantial part of its vehicle production to the Middle East, but that this was now being seriously challenged by heavy subsidies being offered by exporters from other countries.

He said overcapacity caused by the slump in sales during the global financial crisis was prompting manufacturers to offer $3000, $4000 and $5000 in market support per vehicle.

 center imageLeft: Senator Kim Carr

He said one of the prime examples was Ford’s Crown Victoria, a large rear wheel drive car that has recently ended production.

“The Taurus is also being heavily subsidised, and we have lost contracts to Chrysler,” Senator Carr said.

Senator Carr also gave a slap to Australia’s state governments for abandoning local cars, despite the rapid improvement in fuel efficiency and emissions.

He said those governments should revise their procurement in the light of improvements made by the local car-makers.

“Around 80,000 fewer Australian cars were purchased by state governments in 2009 than in the past,” he said. “They are switching to imported vehicles.

“There is no excuse for it.”

Senator Carr said state governments claimed they were making the switch to imported cars on the basis of their environmental concerns.

But he said the local manufacturers were now making engines that offered “very significant” fuel savings and that were “as good as any”.

“We have seen this transformation in the last two and a half years,” he said.

“There is no reason for people who argue on environmental grounds that they have to buy imported vehicles when they can choose high quality, fuel efficient domestically made vehicles.”

Ford Australia president Marin Burela said that winning back a proportion of government procurement orders was one of the driving forces behind the foreshadowed adoption of the EcoBoost four-cylinder turbo engine for the Falcon.

“There are some sectors of the market out there that we do not participate in because we do not have a four-cylinder Falcon.

“Those markets, and that includes government fleets, now open up for us.

“That will now give us he opportunity to grow our business that we have not had in recent years.”

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