Automotive Industry Case Study

The threats to the automotive industry in Australia are very concerning to the prosperity of its workers and the companies who have chosen to do business there. First, the lax tariff laws on imported vehicles make Australia a target market for most automakers. The business environment has become extremely competitive as a result of the competition from over 65 auto brands. The market becomes very diluted because of the amount of choices available to consumers. To make matters worse, the last global economic recession greatly slowed down auto sales and thus the demand for Australian automobiles. Also, because of the change in the global auto market, more consumers were looking to buy small cars, while Australian automakers specialized in …show more content…
What used to be strength for the industry may now be a threat, as the Australian dollar continues to strengthen. This is a huge disadvantage to automakers looking to export from Australia. If this trend continues, there may not be enough scale from dwindling foreign sales and a small domestic market to keep the operations open. Not only does the strengthening of the currency hurt the OEMs’ ability to export but also it gives an advantage to car companies who import, as they can now undercut the domestic competition in prices. The trend in Australian governmental policies is also threatening the prosperity of the auto industry. Luxury car and carbon taxes make cars more expensive for consumers and manufacturers have been strained to meet the government’s difficult fuel efficiency challenges of the last few years. The support the manufacturers were getting from the government to develop these types of vehicles was not enough. Finally, the multiple free trade agreements that the Australian government has signed since 2005 have allowed for more competition to enter Australia’s small market Part of the deal includes the lifting of tariff barriers on imports, which gives the advantage to countries who import cars and …show more content…
The first idea would be to simply let the industry die. This would be a huge blow to many workers initially. However, there could be hope for these highly skilled laborers. There are many other applications where automotive workers and resources could be translated. One of these areas is the mining industry. The mining industry could view this exit from the auto industry as a way for it to grow, both in scale, and technologically. The next idea would be for the government to provide more financial aid to the automotive manufacturers for research and development. This would help the manufacturers be able to achieve the environmental goals the government has put in place. More technologically advanced vehicles developed with government investment could give Australian automakers a leg up on the competition in both the domestic and foreign auto market. The government could use funds from the luxury and carbon taxes to invest back into the OEMs to make more fuel-efficient cars. They could then offer incentives to Australian citizens who choose to buy Australian made and environmentally friendly products. These incentives for consumers would provide a new reason reconsider buying an imported