Locals 'squeezed' by the competition

"Don't take this as a political statement..." was how Phil Horton presaged his remarks about the future of vehicle manufacturing in Australia.

The Managing Director of BMW Australia took a moment out of his presentation to journalists attending the launch of the updated Z4 sports car, to comment on the situation faced by Holden (and Toyota by implication). Horton began by volunteering his view that Ford's decision to close manufacturing plants at Geelong and Broadmeadows would inevitably have a domino effect on the rest of the industry. And furthermore, governments of neither political persuasion have the necessary will to keep the industry afloat.

"I do feel that... the way big cars in particular have been trending down – and for Ford, even though I think they've got some great products, when they stop manufacturing that will have an impact. And even now it's starting to have an impact," said the BMW chief, who began his career in the industry with Ford.

"Again, my personal view is that with a coalition government, I think the writing is on the wall – for Holden. Even with a Labor government I just don't get a good gut feel about the way that whole part of domestic manufacturing is going in Australia. Could be proved completely wrong, but GM has closed other factories, and Australia is a long way away from head office."

It would seem unusual for the head of a prestige brand to comment on the travails of local manufacturers, but Horton clearly felt compelled to offer his views because he has seen it all before. In his homeland, the UK, growth in the premium segment effectively ended at least two large-scale volume manufacturing operations, but the ascendancy of brands from Asia delivered the coup de grace.

"All of a sudden premium cars became what the fleet market wanted to buy, because of the stronger residual values, so they deserted Vauxhall – GM obviously – and Ford in droves. And at the same time, the Japanese, and later the Koreans, were coming in and really attacking the bottom end of the market as well.

"Ford and Vauxhall... were just squeezed – between the premiums getting bigger, and going down, and the cheaper brands coming up. And now you've got the extra dimension where you've got people like Hyundai, for instance, building bloody good cars. They'll get their [expletive] together as well – and that will be even more competition."

For Horton, the local manufacturing challenge in Australia is a case of déjà vu – and he simply sees no possible happy ending. Holden may find export markets for Commodore – and that would certainly stave off the end of operations at Elizabeth – but the domestic market will be increasingly difficult. Forget premium brands encroaching on volume-selling family cars, or cheap but well finished small cars offering more kit at a lower price than the locals, it can all be summed up by the one word: competition.

"You can't believe how competitive this market is," Horton noted. "Nothing's going to change, but there are too many brands."

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