Australia’s Auto Production Goes Down Under

Say goodbye to car production in Australia.

Say goodbye to car production in Australia. The last three automakers with domestic assembly plants—Ford, General Motors Holden and Toyota—are now closed. The last Toyota and Holden models rolled off the line at their respective facilities in Melbourne and Adelaide in October, a year after Ford shuttered its plant outside of Melbourne.

The closures come at a time of unprecedented growth in Australia’s auto industry, at least in terms of sales, and overall economic prosperity over the last six years. Australians purchased a record 1.18 million vehicles last year—the third record in four years—and the industry is on pace to eclipse that mark in 2017. But domestic production, which peaked at 475,000 units in 1970, plunged to 155,000 cars last year. 

 

The collapse began decades ago as competition grew from low-cost cars imported from Japan, South Korea and, more recently, Thailand. Benefiting from near-zero tariffs, foreign cars were cheaper and/or better-equipped than local models. As a result, there are more than 50 brands and 400 vehicle models vying for sales in a market that has been called the world's "most competitive and fragmented" automotive landscape.

Meanwhile, high labor costs and unfavorable currency exchange rates essentially prohibited exports. Toyota was the only automaker with any success in recent years, shipping a cumulative 1.3 million units worldwide from Australia—mostly to the Middle East—over the past two decades.

At its peak in 2004, Holden produced 165,000 cars, while Ford and Toyota topped out at 155,000 in 1984 and 148,000 in 2007, respectively. Even those levels fall short of the 250,000 bogey typically needed for a plant to be profitable—and it showed. Combined, the three carmakers lost more than $1.5 billion on their Australian plants over the past decade, despite receiving more than twice that in government assistance. Ford has said operating costs in Australia were twice as high as its European operations and nearly four times that of its Asian units. GM complained it spent nearly $3,800 more to build a vehicle in Australia.

 

Still, the closures are disappointing, especially considering Australia’s long and illustrious automotive history. Production in the country dates to the Phantom steam car in 1896. Five years later, Harley Tarrant produced the country’s first gasoline-fueled car. Ford, which started selling cars in Australia in 1904, launched local output in 1925. After getting its start in horse saddles, Holden transitioned to cars in 1908. GM acquired the company in 1931 and launched the brand’s namesake model in 1948. Toyota, which has been Australia’s largest car producer and best-selling brand for more than a decade, launched production in 1963 with the Tiara—its first model produced outside of Japan.  
 

Australia’s automotive past is littered with casualties. Chrysler produced a version of the Valiant there until 1980 when it sold its local operations to Mitsubishi, which subsequently closed the plant in 2008. Nissan, which began making Datsun-badged models through local contractors in the 1960s, pulled the plug in 1992. Other bygone manufacturers in Australia include British Leyland, Renault, Volkswagen and dozens of smaller nameplates and contract producers—including the defunct Australian Motor Industries, which built vehicles for Mercedes, Toyota, Rambler, Standard, and Triumph from 1958 to 1987. 
 

Known for large rear-wheel-drive cars and powerful engines, Australia has given birth to many iconic nameplates. Chief among these are the venerable Holden Commodore and sporty Ford Falcon, which fittingly were the last vehicles produced by each manufacturer. Other Down Under classics include the Austin 1800, Chrysler R-Series Valiant Charger, Ford Territory SUV, Leyland P76, Mitsubishi Ralliart Magna, Toyota Aurion and several Holden models (FJ, FX/48-215 and HK Monaro GTS). Toyota currently remains the top-selling brand—led by the Hilux SUV and Corolla small car—followed by Mazda, Hyundai, Holden and Ford.
 

In conjunction with ending production, Ford, GM and Toyota have made significant headcount reductions. But they aren’t closing shop entirely. All have vowed to keep several hundred or more designers and engineers on hand to work on—and in some cases lead—global projects. Hopefully this will help keep Australia’s passion for cars and innovative design and engineering alive, even if the vehicles are no longer produced locally.