poita
4th September 2013, 11:01 PM
http://news.drive.com.au/drive/motor-news/endangered-species-20130830-2suk5.html?utm_source=drive&utm_medium=newsletter&utm_content=newsletter&utm_campaign=new_newsletter_v1
The car industry is bracing for more importer brands to buckle in Australia amid shrinking profit margins and ambitious price regimes from competitors.
Following Opel’s decision to wind down its Australian operations this month, questions have been raised over whether the current level of sales can be rationed any further between brands.
Australian consumers currently have one of the widest selections of automotive brands anywhere in the world, with 60-something manufacturers (depending on whether you include sub-brands and ultra low volume makers) and more than 350 different models. That's despite a relatively modest annual demand of roughly 1.1 million new car sales (about 1.25 per cent of the global market).
While Opel’s sudden exit last month came as a shock to most in the industry, there is now speculation that more casualties will follow the General Motors-owned brand, joining Daewoo, Saab, Hummer, and Daihatsu on the scrapheap of brands amassed in Australia during the past decade.
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Holden also pulled back on launching the famed American Cadillac brand in Australia at the 11th hour, a victim of the US bankruptcy of General Motors combined with the dominance of German luxury brands in Australia.
Despite being part of the gigantic Volkswagen Group, Spanish brand Seat also found it too tough in Australia and packed-up a decade ago after a short stint being imported by the Astre group.
“If you go back to the 1980s, you had tariffs of 57.5 per cent, you had quotas and you had a floating dollar at 50 cents,” one high-ranking industry official told Fairfax Media. “Put those things together today and you have an effective tariff at about 3.5 per cent, you have a dollar that’s been, in recent times, over parity for the US dollar for extended periods of time … it’s very open.
“The reality is that in a purely competitive market, there’s always going to be someone at the margins – that’s just the nature of markets.”
While the record level of competition has been a boon for bargain-savvy car buyers, industry figures suggest many existing importers are floundering. Among those to endure languishing sales this year are Chery, Citroen, Dodge, Foton, Peugeot, Proton and Ssangyong. In addition, freshly revived mainstream brands such as Nissan’s luxury arm Infiniti and the Volkswagen-owned Skoda have struggled to gain a foothold.
The competitiveness of the market has also spelled bad news for well established brands such as Mitsubishi, which recently posted a loss of $34.7 million in the 12 months to March 31 despite posting a $23.1m profit the previous year when it sold just 3000 more vehicles. Mitsubishi has publicly stated the loss was due to the fierce competition of the Australian car market.
Despite its standing in the wider automotive landscape, Opel lasted barely 12 months in Australia, selling only 1500 vehicles across its network of 20 dealerships. Outgoing boss Bill Mott insisted in February that the brand was in Australia “for the long haul”, but despite his promise of an expanded model line-up the brand’s intentions were short-lived.
Mott declined to speak with Fairfax Media but his GM counterpart, Holden chief Mike Devereux, said the German-bred Opel brand was caught in the crossfire of a small-car price war.
“I think if you look at, interestingly, some of the import brands coming into this country in the last couple of months, they’re losing money,” Devereux said.
“They’re losing money and they don’t actually build cars here – it’s astounding. It seems like you’ve got a fairly competitive market, lots of brands on sale and a couple of thousand bucks in price erosion in the small car segment," he told Drive.
“It just shows you how difficult it is to make a good go of it in this country with so many brands."
Devereux said the rampant level of competition stemmed from more relaxed conditions for imported products, a factor which has severely impacted on Holden’s manufacturing operations in Australia.
“The reason there is so many brands is that there are no barriers to entry – none. It’s a great test market for a lot of brands and there are effectively no tariffs,” Devereux said.
“My discussions for my entire time here has always been about global automotive policy and a level playing field.”
Despite the bleak outlook, more emerging manufacturers including ambitious Chinese marques GAC, Brilliance and FAW, continue to eye off the Australian market. Indian brand Tata has just revamped its presence in Australia.
MG (or Morris Garages) re-emerged on the Australian market earlier this year under the ownership of one of China's largest car makers, Shanghai Automotive Industry Corporation. Despite one Sydney dealership and a stockpile of 400 new cars, the local operation still officially hasn’t gone “on sale”, according to spokesman Andrew Shaw.
The brand is being spearheaded by the manual-only MG6 small car – its only variant – with a plan to introduce several new models over the next 18 months.
“We are waiting for all our systems to properly fall into place and then we will begin selling cars to the public,” Shaw said.
“By the time we launch, we want to be completely established. Jumping the gun early just wouldn’t make sense.”
Ford’s global boss, Alan Mullaly recently told Fairfax Media that current market conditions in Australia were perceived as dim by many manufacturers.
“This is the most open market in the world, one of the most competitive markets in the world,” he said. “There are more brands here than anywhere else in the world. There are more models here than anywhere else in the world. This is a really competitive marketplace, and if you’re going to get a chance to participate here, then you need to really, really be competitive.”
with Matt Campbell
Brands under pressure
Chery
The ambitious Chinese marque landed in Australia in 2011 with its aggressively-priced J1 small car, which was initially banned in some states because it did not offer stability control. Chery now sells three models in Australia, but has ultimately struggled to gain traction. Sales are down 25 per cent so far this year, to 618 in the seven months to August.
Chery spokesman Daniel Cotterill said the company had a rejuvenated outlook on the Australian segment with the impending release of its new J3 small car.
“That car is now available with automatic [transmission] and electronic stability control, which gets us on the market in Victoria where we have been precluded from to-date,” he said.
“We think the combination of that going on sale in Australia’s second most popular state, combined with the value-for-money proposition that the J3 presents gives a good first step to getting where we need to be as a brand.”
Citroen
Despite its long-running history in Australia, Citroen sales figures are dwindling. The French brand now boasts an 11-car line-up locally, yet sales are down 30 per cent and a full-year result below 2000 sales is likely. The PSA Peugeot Citroen brand is languishing financially at an international level – this week posting a €5 billion ($7.4 billion) loss - which doesn’t help the cause either.
Citroen Australia PR and communications manager Jaedene Hudson said despite the drop in sales, the brand was tracking where it hoped to be.
“We’re rolling out a new marketing campaign in September that will run all the way through to Christmas and we’re about to launch new models as well,” she said.
“With those changes in place, we’re hoping to begin building up sales again. We have a plan of being in Australia for a long time yet.”
Dodge
Despite its shrinking line-up - now refined to one offering - Dodge insists it is in Australia for the long haul. But with no new models slated for the next 18 months, consumers might be left wanting.
Dodge was expected to be dumped in Australia in the wake of Fiat’s takeover of Chrysler in 2012. The Australian importer has dropped all of its models except the Journey SUV, which has managed 954 sales this year according to July figures.
Fiat Chrysler Group Australia CEO Veronica Johns told Drive earlier this month that Dodge still had the support of its importer.
“People love the Dodge brand,” Johns said.
“For us, that’s what we’ve got to offer so we’re offering it. I think we do need Dodge. People love the Dodge brand. It would be sad to see Dodge go.”
Foton
Chinese manufacturer Foton arrived in Australia late last year with a plan to steal sales from their more established Japanese counterparts. The Foton line-up currently consists of only one dual-cab ute variant, but there are plans to introduce a single cab ute, as well as buses, vans, SUVs and cars.
Foton has sold about 120 vehicles so far this year, but the company remains bullish about its Australian prospects, with aspirations for as many as 100 sales per month next year. There are now 21 Foton dealerships established within the Australia.
“We’re happy with our progress at the moment in what is still a build-up phase,” a Foton spokesman told Fairfax.
“We’re quite bullish about the prospect of improving in the medium term, not only because we’ve got a good product in the Tunland but because we’ve got the prospect of some other segment variants coming in – a single cab and other models altogether like vans and buses. Down the track a bit further we’re also looking at SUVs and car variants, so we won’t be going anywhere.”
Infiniti
After a brief appearance in the Australian market during the ’90s, Infiniti launched a fresh campaign in late 2012. But so far the brand has struggled to gain traction, selling only 170 vehicles so far this year (including demonstrator stock).
Company spokesman Peter Fadeyev denied that Infiniti hadn’t achieved its desired sales figures in its opening year, describing the marque as “an automotive brand on the rise” globally.
“Infiniti’s progress in Australia is developing as planned. Phase one of our brand’s Australian launch is complete. The first of our three Infiniti Retail Centres opened last year and our retail network expansion plans are underway,” he said.
“Last year, we commenced sales in September with two models and this grew to four by December. Shortly, we will add our fifth model, the Infiniti Q50 sedan. More are planned.”
“Infiniti is a strong enterprise, one with a focus on long-term success, and it’s this same long-term view that is being taken with its Australian operations.”
MG
MG (or Morris Garages) re-emerged on the Australian market earlier this year under the ownership of one of China's largest car makers, Shanghai Automotive Industry Corporation. Despite one Sydney dealership and a database of 400 new cars, the local operation still officially hasn’t gone “on sale”, according to spokesman Andrew Shaw.
The brand is being spearheaded by the manual-only MG6 small car – its only variant – with a plan to introduce several new models over the next 18 months.
“We are waiting for all our systems to properly fall into place and then we will begin selling cars to the public,” Shaw said.
“By the time we launch, we want to be completely established. Jumping the gun early just wouldn’t make sense.”
Proton
Proton has existed in the Australian market since the mid-1990s with a modest annual sales output. While its affordable range has traditionally appealed to niche audiences, the brand is now being hamstrung by the competitive dollar and cheaper mainstream rivals – selling only 353 cars in the seven months to August (a 48 per cent drop on the corresponding period in 2012). Tellingly, Proton recently slashed the price of its Preve sedan by $3000, making it the cheapest small car in the country.
Proton Australia sales and marketing manager Billy Falconer said the decline in sales stemmed from a lack of new models.
“We haven’t launched any new cars during the past three years but we’re in the process of getting new cars this year,” he said. “We did expect a drop in sales prior to introducing the new models and launching our new plans.
“We’ve got pretty big plans moving forward and we’re going to be making some big announcements shortly on what our plans are and what we’ve got coming in the future. We’re not going anywhere.”
Skoda
Arrived in Australia in 2007 with ambitions of securing 5000 yearly sales once its product range and dealer network had properly materialised. Then-boss Matthew Wiesner said Skoda would “re-engineer the value equation surrounding the European driving experience”. In Europe, Skoda is perceived as a budget brand to sister company Volkswagen, but in Australia the pricing has been more mainstream.
Spokesman Karl Gehling said brand remained on track with sales numbers, which are forecasted to reach 4000 this year.
“Those predictions of 5000 were made some time ago and the market has changed, but we’re happy with our results and we’re looking ahead on our future growth,” he said.
Gehling said having Volkswagen Australia’s backing was a huge benefit to Skoda as it reduced the niche brand’s operating costs.
Ssangyong
South Korean brand Ssangyong set about a so-called Australian relaunch in 2010, with an ambitious plan to sell 8000 cars annually.
Despite constant price reductions, Ssangyong sales are down nearly 20 per cent this year – with an end-of-year result of barely 1500 likely.
Now under the stewardship of a new distributor, brand spokesman Daniel Cotterill said many of Ssangyong’s woes stemmed from an international level.
“We need Ssangyong at an international level to really step up to the plate with the Australian importer to make the venture work,” he said.
“There’s a facelifted Korando SUV in the pipeline, we’ve just introduced our new Stavic people mover, but what we offer in Australia as an importer relies on the manufacturer at an international level. I believe we can remain viable in what is an extremely competitive market.”
The car industry is bracing for more importer brands to buckle in Australia amid shrinking profit margins and ambitious price regimes from competitors.
Following Opel’s decision to wind down its Australian operations this month, questions have been raised over whether the current level of sales can be rationed any further between brands.
Australian consumers currently have one of the widest selections of automotive brands anywhere in the world, with 60-something manufacturers (depending on whether you include sub-brands and ultra low volume makers) and more than 350 different models. That's despite a relatively modest annual demand of roughly 1.1 million new car sales (about 1.25 per cent of the global market).
While Opel’s sudden exit last month came as a shock to most in the industry, there is now speculation that more casualties will follow the General Motors-owned brand, joining Daewoo, Saab, Hummer, and Daihatsu on the scrapheap of brands amassed in Australia during the past decade.
Advertisement
Holden also pulled back on launching the famed American Cadillac brand in Australia at the 11th hour, a victim of the US bankruptcy of General Motors combined with the dominance of German luxury brands in Australia.
Despite being part of the gigantic Volkswagen Group, Spanish brand Seat also found it too tough in Australia and packed-up a decade ago after a short stint being imported by the Astre group.
“If you go back to the 1980s, you had tariffs of 57.5 per cent, you had quotas and you had a floating dollar at 50 cents,” one high-ranking industry official told Fairfax Media. “Put those things together today and you have an effective tariff at about 3.5 per cent, you have a dollar that’s been, in recent times, over parity for the US dollar for extended periods of time … it’s very open.
“The reality is that in a purely competitive market, there’s always going to be someone at the margins – that’s just the nature of markets.”
While the record level of competition has been a boon for bargain-savvy car buyers, industry figures suggest many existing importers are floundering. Among those to endure languishing sales this year are Chery, Citroen, Dodge, Foton, Peugeot, Proton and Ssangyong. In addition, freshly revived mainstream brands such as Nissan’s luxury arm Infiniti and the Volkswagen-owned Skoda have struggled to gain a foothold.
The competitiveness of the market has also spelled bad news for well established brands such as Mitsubishi, which recently posted a loss of $34.7 million in the 12 months to March 31 despite posting a $23.1m profit the previous year when it sold just 3000 more vehicles. Mitsubishi has publicly stated the loss was due to the fierce competition of the Australian car market.
Despite its standing in the wider automotive landscape, Opel lasted barely 12 months in Australia, selling only 1500 vehicles across its network of 20 dealerships. Outgoing boss Bill Mott insisted in February that the brand was in Australia “for the long haul”, but despite his promise of an expanded model line-up the brand’s intentions were short-lived.
Mott declined to speak with Fairfax Media but his GM counterpart, Holden chief Mike Devereux, said the German-bred Opel brand was caught in the crossfire of a small-car price war.
“I think if you look at, interestingly, some of the import brands coming into this country in the last couple of months, they’re losing money,” Devereux said.
“They’re losing money and they don’t actually build cars here – it’s astounding. It seems like you’ve got a fairly competitive market, lots of brands on sale and a couple of thousand bucks in price erosion in the small car segment," he told Drive.
“It just shows you how difficult it is to make a good go of it in this country with so many brands."
Devereux said the rampant level of competition stemmed from more relaxed conditions for imported products, a factor which has severely impacted on Holden’s manufacturing operations in Australia.
“The reason there is so many brands is that there are no barriers to entry – none. It’s a great test market for a lot of brands and there are effectively no tariffs,” Devereux said.
“My discussions for my entire time here has always been about global automotive policy and a level playing field.”
Despite the bleak outlook, more emerging manufacturers including ambitious Chinese marques GAC, Brilliance and FAW, continue to eye off the Australian market. Indian brand Tata has just revamped its presence in Australia.
MG (or Morris Garages) re-emerged on the Australian market earlier this year under the ownership of one of China's largest car makers, Shanghai Automotive Industry Corporation. Despite one Sydney dealership and a stockpile of 400 new cars, the local operation still officially hasn’t gone “on sale”, according to spokesman Andrew Shaw.
The brand is being spearheaded by the manual-only MG6 small car – its only variant – with a plan to introduce several new models over the next 18 months.
“We are waiting for all our systems to properly fall into place and then we will begin selling cars to the public,” Shaw said.
“By the time we launch, we want to be completely established. Jumping the gun early just wouldn’t make sense.”
Ford’s global boss, Alan Mullaly recently told Fairfax Media that current market conditions in Australia were perceived as dim by many manufacturers.
“This is the most open market in the world, one of the most competitive markets in the world,” he said. “There are more brands here than anywhere else in the world. There are more models here than anywhere else in the world. This is a really competitive marketplace, and if you’re going to get a chance to participate here, then you need to really, really be competitive.”
with Matt Campbell
Brands under pressure
Chery
The ambitious Chinese marque landed in Australia in 2011 with its aggressively-priced J1 small car, which was initially banned in some states because it did not offer stability control. Chery now sells three models in Australia, but has ultimately struggled to gain traction. Sales are down 25 per cent so far this year, to 618 in the seven months to August.
Chery spokesman Daniel Cotterill said the company had a rejuvenated outlook on the Australian segment with the impending release of its new J3 small car.
“That car is now available with automatic [transmission] and electronic stability control, which gets us on the market in Victoria where we have been precluded from to-date,” he said.
“We think the combination of that going on sale in Australia’s second most popular state, combined with the value-for-money proposition that the J3 presents gives a good first step to getting where we need to be as a brand.”
Citroen
Despite its long-running history in Australia, Citroen sales figures are dwindling. The French brand now boasts an 11-car line-up locally, yet sales are down 30 per cent and a full-year result below 2000 sales is likely. The PSA Peugeot Citroen brand is languishing financially at an international level – this week posting a €5 billion ($7.4 billion) loss - which doesn’t help the cause either.
Citroen Australia PR and communications manager Jaedene Hudson said despite the drop in sales, the brand was tracking where it hoped to be.
“We’re rolling out a new marketing campaign in September that will run all the way through to Christmas and we’re about to launch new models as well,” she said.
“With those changes in place, we’re hoping to begin building up sales again. We have a plan of being in Australia for a long time yet.”
Dodge
Despite its shrinking line-up - now refined to one offering - Dodge insists it is in Australia for the long haul. But with no new models slated for the next 18 months, consumers might be left wanting.
Dodge was expected to be dumped in Australia in the wake of Fiat’s takeover of Chrysler in 2012. The Australian importer has dropped all of its models except the Journey SUV, which has managed 954 sales this year according to July figures.
Fiat Chrysler Group Australia CEO Veronica Johns told Drive earlier this month that Dodge still had the support of its importer.
“People love the Dodge brand,” Johns said.
“For us, that’s what we’ve got to offer so we’re offering it. I think we do need Dodge. People love the Dodge brand. It would be sad to see Dodge go.”
Foton
Chinese manufacturer Foton arrived in Australia late last year with a plan to steal sales from their more established Japanese counterparts. The Foton line-up currently consists of only one dual-cab ute variant, but there are plans to introduce a single cab ute, as well as buses, vans, SUVs and cars.
Foton has sold about 120 vehicles so far this year, but the company remains bullish about its Australian prospects, with aspirations for as many as 100 sales per month next year. There are now 21 Foton dealerships established within the Australia.
“We’re happy with our progress at the moment in what is still a build-up phase,” a Foton spokesman told Fairfax.
“We’re quite bullish about the prospect of improving in the medium term, not only because we’ve got a good product in the Tunland but because we’ve got the prospect of some other segment variants coming in – a single cab and other models altogether like vans and buses. Down the track a bit further we’re also looking at SUVs and car variants, so we won’t be going anywhere.”
Infiniti
After a brief appearance in the Australian market during the ’90s, Infiniti launched a fresh campaign in late 2012. But so far the brand has struggled to gain traction, selling only 170 vehicles so far this year (including demonstrator stock).
Company spokesman Peter Fadeyev denied that Infiniti hadn’t achieved its desired sales figures in its opening year, describing the marque as “an automotive brand on the rise” globally.
“Infiniti’s progress in Australia is developing as planned. Phase one of our brand’s Australian launch is complete. The first of our three Infiniti Retail Centres opened last year and our retail network expansion plans are underway,” he said.
“Last year, we commenced sales in September with two models and this grew to four by December. Shortly, we will add our fifth model, the Infiniti Q50 sedan. More are planned.”
“Infiniti is a strong enterprise, one with a focus on long-term success, and it’s this same long-term view that is being taken with its Australian operations.”
MG
MG (or Morris Garages) re-emerged on the Australian market earlier this year under the ownership of one of China's largest car makers, Shanghai Automotive Industry Corporation. Despite one Sydney dealership and a database of 400 new cars, the local operation still officially hasn’t gone “on sale”, according to spokesman Andrew Shaw.
The brand is being spearheaded by the manual-only MG6 small car – its only variant – with a plan to introduce several new models over the next 18 months.
“We are waiting for all our systems to properly fall into place and then we will begin selling cars to the public,” Shaw said.
“By the time we launch, we want to be completely established. Jumping the gun early just wouldn’t make sense.”
Proton
Proton has existed in the Australian market since the mid-1990s with a modest annual sales output. While its affordable range has traditionally appealed to niche audiences, the brand is now being hamstrung by the competitive dollar and cheaper mainstream rivals – selling only 353 cars in the seven months to August (a 48 per cent drop on the corresponding period in 2012). Tellingly, Proton recently slashed the price of its Preve sedan by $3000, making it the cheapest small car in the country.
Proton Australia sales and marketing manager Billy Falconer said the decline in sales stemmed from a lack of new models.
“We haven’t launched any new cars during the past three years but we’re in the process of getting new cars this year,” he said. “We did expect a drop in sales prior to introducing the new models and launching our new plans.
“We’ve got pretty big plans moving forward and we’re going to be making some big announcements shortly on what our plans are and what we’ve got coming in the future. We’re not going anywhere.”
Skoda
Arrived in Australia in 2007 with ambitions of securing 5000 yearly sales once its product range and dealer network had properly materialised. Then-boss Matthew Wiesner said Skoda would “re-engineer the value equation surrounding the European driving experience”. In Europe, Skoda is perceived as a budget brand to sister company Volkswagen, but in Australia the pricing has been more mainstream.
Spokesman Karl Gehling said brand remained on track with sales numbers, which are forecasted to reach 4000 this year.
“Those predictions of 5000 were made some time ago and the market has changed, but we’re happy with our results and we’re looking ahead on our future growth,” he said.
Gehling said having Volkswagen Australia’s backing was a huge benefit to Skoda as it reduced the niche brand’s operating costs.
Ssangyong
South Korean brand Ssangyong set about a so-called Australian relaunch in 2010, with an ambitious plan to sell 8000 cars annually.
Despite constant price reductions, Ssangyong sales are down nearly 20 per cent this year – with an end-of-year result of barely 1500 likely.
Now under the stewardship of a new distributor, brand spokesman Daniel Cotterill said many of Ssangyong’s woes stemmed from an international level.
“We need Ssangyong at an international level to really step up to the plate with the Australian importer to make the venture work,” he said.
“There’s a facelifted Korando SUV in the pipeline, we’ve just introduced our new Stavic people mover, but what we offer in Australia as an importer relies on the manufacturer at an international level. I believe we can remain viable in what is an extremely competitive market.”