- BRW Lists
Published 18 February 2013 12:10, Updated 19 February 2013 07:34
Federation of Automotive Products Manufacturers chief Richard Reilly says the arrival of cars like Holden’s Cruze means that governments looking to buy Australian no longer have to choose only a big six. Photo: Holden
The federal government’s planned $1 billion boost to manufacturing gives producers of car components a much-needed incentive to develop products for new markets, but these will need to be coupled with separate measures to raise demand in Australia for more locally made cars.
The Federation of Automotive Products Manufacturers welcomes the Plan for Australian Jobs program unveiled at the weekend. The program seeks to create industry precincts to stimulate development, improve access to finance for small and medium enterprises, and to set up a venture capital fund.
“We realise with our volumes currently down a bit, we need to diversify, we need to change our product mix and enter new markets,” FAPM chief executive Richard Reilly says. “How do you do that? By innovation. These policy incentives are going to assist Australian manufactures to do that.”
Cohda Wireless, an Adelaide-based start-up developing car-to-car communications technology that prevents collisions, last month sold a 12.5 per cent stake to IT company Cisco and semiconductor maker NXP. The company now has its technology in 1500 cars in the largest US trial of car-to-car communication under way and chief executive Paul Gray said the new $380 million venture capital fund was a good move.
“Our initial funding came from a government venture capital fund managed by SciVentures, so there is certainly evidence that such funds can work,” he said on Monday.
Gray said assistance outlined to help small- and medium-sized companies bid on large projects wasn’t relevant to Cohda now but could become so.
“There are no projects in our space right now,” he said. “However that is likely to change in a few years. I daresay for other automotive focussed SMEs it could be of immediate benefit.”
The plans themselves do little, however, to address the low level of state and local government fleet purchases of locally made cars. While the federal government, along with the state governments of Victoria and South Australia – the homes of Australia’s car assembly industry – bought 71 per cent of all passenger vehicles from locally made cars in 2011-12, the figures in other states were much lower.
For Queensland the figure was about 45 per cent, NSW and Northern Territory were about 40 per cent, while Western Australia and Tasmania were in the mid-30s. The average for local governments was about 30 per cent, while in the ACT the figure was in the 20s.
“If we can turn that around, get these organisations to consider buying, that’s good,” Reilly says. “The old arguments that councils and governments made – that they didn’t want to buy big, six-cylinder cars – there are options now that weren’t available in the past. Holden Cruze is four cylinder, there is the hybrid Camry, and the Commodore and Falcon are much more fuel-efficient and emission-friendly than in the past.”
The government and the parts industry are hoping William Angove, a former president of Ford in Indonesia, will be able to encourage fleet buyers to increase purchases of locally made cars in his role as the country’s first so-called Automotive Supplier Advocate. Angove was appointed in December.
Jim Mitchell, chief executive of Coating & Industrial Technologies, which develops coatings for cars and is based in Victoria, says assistance programs may be useful, but the tax reforms to encourage purchases of local cars are better.
“They don’t tend to look at the picture for the maximum benefit,” Mitchell said on Monday. “These programs are very well, but you don’t have to do a lot to get incentives.
“Would you not be better off taking off fringe benefits tax for companies who purchase local vehicles? I see heaps more benefits in that.”
Reilly says tax isn’t intended to be part of this industry policy.
“It is a manufacturing statement,” he says. “The fringe benefits tax is tax policy. It’s a different beast. That was not the particular focus of this statement.”