Carbon tax to cost local car makers $50 million

The FCAI estimates the carbon tax will translate into a $30-50 million slug on local auto manufacturers. It’s a cost Holden, Ford and Toyota have to absorb in the face of hot competition from importers who aren’t faced with the tax.

While industry representatives will be lobbying government to attenuate its impact in other concessions, it places extra stress on the local triumvirate to scrutinise productivity and operating efficiencies like never before. And this being a time of high competition in what is already one of the most fiercely competitive automotive marketplaces in the world, that will very likely be to the benefit of the consumer. They cannot afford to have it show up in the product, Toyota executive VP David Buttner told motoring.com.au at last week’s VFACTS survey launch.

"Look, it’s a challenge – based on current production figures, we’re looking at a cost of approximately $115 per vehicle, which we estimate will come to about $20m."

If that doesn’t sound like much, take it as a reflection of the narrowness of margins and the razor-sharpness of current market competition.

"We’ve been manufacturing cars here for more than 40 years," Buttner continues, "so we’ve already been through the reduction of protection tariffs from 57 to five per cent. That had the effect of making the local industry internationally competitive, plus it means we’re pretty used to looking at our cost structures, our productivity and efficiency.

"So it comes down, as always, to the kaizen – continuous improvement – philosophy we’ve run on for so many years. That’s seen our efficiencies and quality levels rise and our production costs drop palpably over the last ten years and yes, this is a challenge, but it’s a matter of looking again at our productivity levels, our utilisation of every resource and, under the auspices of the FCAI, nutting it out with government."

Can he see the impost evidencing itself in the product in any way? "No – we can’t afford for that to happen. Not here. We’re one of the most competitive marketplaces in the world – 62 brands from 26 countries. And though we only represent 0.05 per cent of the total global market, being small but rich we’re also a very important testing ground. It’s an ideal market for manufacturers to dip toes into with things they’d baulk at in bigger markets. There’s simply no room for decline in product quality in any way," stated Buttner.

Read the latest news and reviews on your mobile, iPhone or PDA at carsales' mobile site…