Local automotive industry alive and kicking

Senator Nick Xenophon has called on the federal government to urgently act on recommendations made by a Senate Inquiry in December 2015 to address "critical skills shortages currently crippling large parts of the automotive sector".

His plea co-incides with today's launch of a new report that's claimed to be the most comprehensive analysis ever into the state of Australia's motoring industry.

Titled 'Directions in Australia's Automotive Industry', the report provides a detailed, data-driven snapshot of the local industry in the period leading up to the end of passenger-vehicle manufacturing at Toyota's Altona plant west of Melbourne and Holden's Elizabeth plant north of Adelaide. Ford closed its Campbellfield and Geelong plants in Victoria last October.

Commissioned by the Motor Trades Association of Australia (MTAA) in part because of its frustration at the lack of action on the Senate Inquiry's 18-month-old recommendations, which governments normally have three months to respond to, the report was conducted with more than 1000 automotive businesses Australia-wide.

It reveals that despite the end of car manufacturing this October, Australia's automotive industry continues to remain a vital cog in the nation’s economy, worth $37.1 billion and employing 380,000 people in 70,000 businesses across the nation.

“There seems to be an attitude in government that the auto sector will die a slow death with the impending closure of Toyota and Holden’s manufacturing operations in October,” said Xenophon this morning.

“This couldn’t be further from the truth. More than 91 per cent of Australian industries are using automotive goods and services undertaken by businesses, many of them family-run.”

Xenophon said there was urgent need for a co-ordinated approach to training and skills development, including creating more apprenticeship opportunities, because currently more than 27,000 jobs in a variety of fields are waiting to be filled -- the highest ever recorded -- and this figure is expected to rise to 35,000 within a year.

“With South Australia's Holden workers looking for jobs there isn’t a better time to retrain them in other areas of the automotive industry," said Xenophon.

“The jobs are there but the government has failed to heed repeated warnings to act to address these shortages.

“The auto industry is vital to this country but it seems the government just doesn’t get it and needs a jump start to get into gear and act swiftly.”

Xenophon said the chronic job shortages were already being felt by customers who were being forced to wait for longer periods just to have their vehicles serviced and repaired.

But all is not lost, according to Geoff Gwilym, the Executive Director of the VACC, one of the organisations that contributed to the report.

"A key finding in the report is that Australia's automotive industry is here to stay," Gwilym was quoted saying in a press release.

"Passenger vehicle manufacturing will cease in October this year, but that is, and always has been, a small component of the entire automotive industry, which is still very robust with 69,365 businesses operating across the country."

The report is full of data that may confound many readers, not least of all car dealers operating on profit margins as low as 2.6 per cent. Repair and servicing businesses collected 12.2 per cent of their takings in profit between 2015 and 2016. In contrast, profit for fuel retailing was just 2.4 per cent.

Taken as a whole, the automotive industry employs nearly 380,000 staff and contributes $37.1 billion (or 2.2 per cent of GDP) to the country's economy.

While many lament the passing of the manufacturing industry, the report reveals that building cars and parts account for just 4.4 per cent of the total industry. By far the greatest component is repair and servicing, which comprises 54.0 per cent, followed a long way behind by retail sales (8.3 per cent).

Contrary to common perception, as much as 96.5 per cent of automotive business is owned and operated by families or other small enterprises. Almost 42 per cent of auto businesses are run by sole proprietors and not quite 55 per cent employ between one and 19 staff members.

The life cycle of a vehicle ends with scrappage, and according to the report something like 800,000 registered vehicles were taken off the road during 2015 and 2016. Despite that, the age of Australia's vehicle fleet is 10.1 years, defying the best efforts of the 69 vehicle brands selling cars in Australia to match up 2.3 million vehicles with buyers during the same period.

Lastly, and this will not give environmentalists much cause to cheer, the report has found that as few as one tenth of one per cent of cars on the road are electric-powered.