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Auto Industry News – Q2 2017

We review all the major news events in the automotive industry from the second quarter of 2017.

Sales and Manufacturing

As local auto makers prepare to bow out, both the Victorian government and Federal government have belatedly given the local manufacturing scene a boost in the arm. This comes courtesy of $90m funding and a separate $100mfund respectively. The news would have been immaterial according to the likes of Holden, who claim that despite a second consecutive year of profits, manufacturing cars locally would have been unsustainable. Toyota felt the pain of its local restructure though, as its profits slumped. Ford on the other hand have turned their attention towards the future, including autonomous vehicles and ride sharing services.

On the sales front, compact light hatchbacks continue to lose momentum against SUVs, while sales for diesel passenger vehicles are now approximately half of what they were in 2008. Elsewhere, Mazda was named the most reputable car company in Australia, followed by Toyota and Hyundai.

Ending the quarter, Japan’s auto parts business Takata, who were embroiled in a longstanding controversy surrounding faulty airbags, filed for bankruptcy. With enormous liabilities exceeding 1.7 trillion yen, Key Safety Systems looks set to pounce and acquire the company.

 

Safety and Environment

Data was released showing Aussie motorists are producing up to 50% more emissions than drivers in European cities, while the quality of our fuel ranks 66th in the world. The UK has responded by making a push to reduce diesel vehicle sales and lower pollution, although Australia looks set to defy this trend as SUV diesel car sales soar. Manufacturers’ actions could define the battle though, with the likes of Volvo signalling they don’t intend to continue producing diesel vehicles in the future.

In other news, for the second time this year an enormous haul of counterfeit car parts were intercepted in the UAE. The batch included fake brake pads and head gasket kits, with some of the parts believed to have been on route to Australia.

 

Technology

In the fuel technology sector, things continue to advance. Locally, a report by the National Transport Commission identified fuel efficiency improvements in light vehicles during 2016 were the slowest in 10 years. Furthermore, findings also suggested that Australian motorists continue to move towards larger cars, as green vehicles took a backwards step in terms of the proportion of new cars sold.

The sector could be shaken up however, following a discovery at the UNSW which identified “a cheap way of generating hydrogen from water”. The discovery is leading some to predict the viability of the fuel technology and its local prospects have increased. Whether hydrogen or electricity become the new incumbent(s) remains to be seen, but UBS is tipping electric vehicle prices to approach those of petrol powered vehicles as early as next year, now that worldwide sales have tipped 2m vehicles.

Meanwhile, Roads Australia weighed in about the future of autonomous vehicles, predicting “every new vehicle sold in Australia within 10 years will be driverless”. Further abroad, but still in the self-driving segment, Apple received a testing permit for its driverless technology. Additionally, Google clocked up 1 million kilometres of autonomous vehicle driving including real world tests via an early rider program. Google’s milestone is expected to place it well ahead of any other manufacturers in this area, while also experiencing substantially lower failure rates.

With that said, one US study is suggesting we might move away from owning vehicles as driverless technology is introduced. Even more of interest, some have already started to turn their attention towards the next big potential technology, flying vehicles – something that Uber appear to be keen to get in on.

As for other technical developments, Mazda Australia was spruiking its autonomous emergency braking system as a “safety standard revolution” following its introduction across a wide variety of the auto maker’s vehicle range. Toyota is working on technology that would identify drivers experiencing a heart attack, and safely pull their car over. Last but not least, Apple announced that it will release a system update later this year featuring a “do not disturb” function that comes into effect when it detects someone is driving.

 

Legal and Regulatory Issues

Vehicle emissions continued to be a sticking point for various stakeholders during the quarter. After moves from Paris and London to address emissions testing, the AAA began to press the Australian Government to do more on the issue – as well as further road safety funding. BMW Australia also contributed to the broader topic, taking a swipe at our politicians for failing to promote low emission vehicles such as electric cars. On a related point, the Electric Vehicle Council was launched in Canberra and provided a $400k grant.

Even though Volkswagen set out at the beginning of the year to address its affected vehicles in the local market, the manufacturer drew the ire of many Australian motorists for its software upgrades.

As has been customary for some time now, the diesel emissions scandal engulfed other parties. This time, authorities took action against Fiat and Mercedes Benz over concerns they have been caught up in their own emissions scandals.

Finally, as the focus on autonomous driving gathers steam, ANCAP put forward the suggestion that road laws should be nationalised to facilitate the integration of the technology. Moves to do so would follow the likes of Germany, where laws have been passed to approve self driving vehicles.

 

Making Sense of Car Servicing

Even for experienced car owners, or motorheads, car servicing can be an uncertain and difficult minefield to navigate. From capped-price servicing, to decisions on what parts to use and where to take the vehicle, or even the frequency with which your vehicle enters the garage – there are no shortage of decisions to consider.

First things first, servicing should be considered for what it really is – preventative maintenance. The purpose is to keep your car in good shape and identify any potential issues before they become a concern. As such, the key is to keep on top of your service schedule and book your car in regularly as per its recommended service intervals – often every 6 or 12 months, or 10-15,000km, whichever comes first.

Instead, what many motorists do is wait for a problem to arise and then take their vehicle in for repairs as well as general servicing. The problem with this approach is, not only can preventative maintenance potentially help prevent the issue in the first place, but it can save you considerable money.

Another thing you may want to consider is servicing your vehicle through an independent mechanic. Motorists often feel as though they are obliged to take their vehicle to a dealership for servicing, or they will void their warranty. This is not quite true. If your car is affected by a warranty issue, the independent mechanic will refer you back to your dealer for the manufacturer to subsidise the work. Outside of that, independents can offer very competitive prices, particularly if they utilise aftermarket, rebuilt or reconditioned parts.

More recently, some transparency has crept into the servicing process. Whereas previously a motorist would be flying blind with regards to the prices they would receive, servicing has become a little more structured. Drivers now have access to dealers who offer fixed or capped-price servicing programs, where motorists are provided with a price ceiling for their service, usually for a certain amount of years. As always however, motorists need to pay attention to inclusions and exclusions, the eligible timeframe, the frequency of the service, as well as any other terms and conditions.

The other trend which has become more prominent is menu-based servicing. This details the specific components, and labour, included in your vehicle’s service and their respective cost. Effectively, an itemised breakdown. When referenced with prices for individual parts, this type of summation provides some insight to understand the margins your mechanic is charging.

Accordingly, motorists have considerably greater scope to shop around and compare their service costs between service providers, or for varying makes of cars. With that said, motorists shouldn’t confuse price differences between different car manufacturers as being attributable to the mechanic or dealership. After all, there are a multitude of vehicle-related factors which play their part, not least of which concerns things like availability of parts and the frequency of servicing.

 

Q1 2017 – When One Door Closes, Another Opens

We review all the major news events in the automotive industry from the first quarter of 2017.

Manufacturing

Soon to join Ford and Holden among the casualties within the local automotive scene, Toyota announced plans to close its engine casting and manufacturing facilities on October 3 this year. Australian car part manufacturers could be the beneficiaries, with local parts being touted for use in foreign diplomats cars.

On a global level, the arrival of US President Donald Trump shook things up for automakers, with some of the biggest names under scrutiny for prioritising investment outside the USA.

Despite its issues, Volkswagen claimed the mantle to become the world’s largest auto manufacturer.

 

Safety and Environment

In what is another troubling case, authorities seized over 500,000 fake and counterfeit car parts in Abu Dhabi that were destined for Australia. The issue continues to be one proving troublesome for the industry. In an announcement to combat the problem, the Federal Chamber of Automotive Industries will implement a new system designed to stop fake parts at the border.

In recent days, the AAA has played a flat bat to the Federal Government’s assertion that motorists would save fuel with the introduction of stricter emissions standards. The remarks come as 17 out of 30 vehicles tested on Australian roads exceeded fuel consumption figures by an average of 25%.

Overseas, and Norway took the radical step to temporarily ban diesel cars in Oslo to reduce pollution. The nation’s measures seem to be working though, with the proportion of EV sales to new cars upwards of 50% this year. The UK has also seen record numbers for registration of EVs.

A large spate of Australian recalls closed out the quarter, with 14 separate announcements made by the ACCC in the first fortnight of March.

 

Technology

Self-driving vehicles received a shot in the arm via an announced partnership between GM and Lyft that will include the largest autonomous test set for next year. In Australia, the South Australian Government committed support to 7 driverless programs. Intel announced a $20bn acquisition of autonomous vehicle technology firm Mobileye, indicating it may well want a piece of the automotive supplier landscape. Germany meanwhile, approved a draft law to allow the technology onto roads.

In disappointing news for technologists and environmentalists, local sales figures showed a huge slump for electric vehicles in 2016 despite the year being a record for new car sales. BMW Australia pinned this on the Federal Government, arguing a lack of incentives has failed to convince motorists to buy electric vehicles.

Meanwhile, the Federal Government has committed to invest $55m into technology designed to improve traffic flow and alleviate congestion on our roads.

Another technological highlight saw Mazda propose the removal of spark plugs in favour of a new, world-first fuel technology destined for local drivers.

 

Legal and Regulatory Issues

Formally, Volkswagen pled guilty in a US court over its Dieselgate saga, with fines exceeding US$4bn. This hasn’t closed off all cases however, with numerous other lawsuits in progress. Also looking to put a line under its own saga, Takata agreed to pay $1.2bn in a US court,

Meanwhile, with a local class action in progress, the CEO of Choice called on Volkswagen to offer compensation to local motorists, and the ACCC took exception to reports of waivers from the automaker absolving responsibility. The ACCC also commenced action against Audi for alleged misleading conduct regarding diesel emissions, but the matter has not yet progressed with any further detail.

In a separate matter, the consumer watchdog has indicated it will ban flex commissions for car salesmen.

Renault and Fiat also drew the attention of prosecutors and regulators for diesel emissions cheating concerns. A slew of other manufacturers like Toyota, Peugeot, Citroen, Ford are also rumoured to be subject to investigation, suggesting the industry issue is far from over.

Also before the courts, Tesla was cleared of responsibility in a fatal crash involving one of its autonomous vehicles last year. The decision could have thrown a spanner into the works for a multitude of companies currently betting driverless vehicles will be the way of the future. Lastly, in another autonomous vehicle dispute, one of Google’s subsidiaries and Uber remain locked in a legal battle regarding intellectual property theft.

 

Are Electric Vehicles Losing Traction in the Market

In a year where new car sales catapulted to new heights, surely it would be reasonable to expect that ‘green’ vehicles with alternative fuel technology shared in this growth? If anything, starting from a low base, one might even expect that their year-on-year growth significantly outperformed petrol and diesel vehicles. After all, Australian motorists are supposedly becoming more environmentally conscious and converting to green technology, no?

Imagine the surprise then, reviewing the recent sales figures for electric vehicles and hybrids in Australia throughout 2016. Electric vehicles in the private passenger segment decreased from 220 sales in 2015, to a dismal 65. That’s right. Not only did electric vehicles in this segment fail to make any meaningful progression, but a mere 65 were sold right around the country over the course of 366 days – lucky to have that extra day too.

As you look across the board in other segments, the numbers for electric vehicles don’t get much better. Sales in the non-private passenger sector decreased 30% (101 vehicles sold). The Private SUV sector sold 7 vehicles, down 92% from 2015 – a number just high enough to count on two hands. The non-private SUV sector decreased 93% from 661 sales in 2015, to 42 in 2016. There’s really no silver lining here at all.

Hybrid vehicles fared significantly better than their ‘eco-friendly’ counterparts, albeit underachieved in some areas. Within the private sector, hybrids saw a respective drop of 4% and 21% for passenger and SUV vehicles. The number of sales for each category however, remains somewhat more respectable than those for electric vehicles at 2,588 and 840.There was encouraging progress in the non-private sector for hybrids, with passenger car sales recording a 9% gain (now 8,049), and SUVs notching up impressive growth of 25% to reach 1,148 sales.

Why then, despite the great fanfare surrounding Tesla’s Model 3 last year in April, are alternative fuel vehicles, particularly electric vehicles, struggling to penetrate into the Australian market? Other countries including Norway and India have already announced initiatives to move towards alternative technology, why is Australia late to the party? Is it a case of motorists pinning their hopes on Tesla’s vehicle, and in the meantime exposing the frailty in the EV market?

We’ve heard calls from Federal and state governments, the Australian Greens Party, auto-makers like Audi, and other key stakeholders for electric vehicles to be supported through an assortment of initiatives – cheaper rego, lower insurance premiums, subsidised charging, and even the prospect of toll discounts. These are all initiatives that will no doubt prove helpful – if not for the fact that there are two other pressing issues which steer motorists away from electric vehicles – a lack of infrastructure, and vehicle prices.

When Tesla’s Model 3 goes on sale later this year, it is set to be priced at $47,500. That’s an improvement over current offerings in the EV market, which range between $55,000 and $130,000. However, the reality is, such a price still represents an imposing figure to motorists who now have access to many ‘affordable’ models of regular vehicles from luxury automakers. Combine that with the fact that motorists are still limited for choice in terms of the necessary infrastructure, and it’s no surprise electric vehicles are losing traction in the market.

The Model 3 could be the starting point for a reversal in sales, but without a fundamental shift from other manufacturers, and the necessary support, it could be some time before traditional vehicles are having to fight for their overwhelming market share.

 

New Cars for 2017

With seeing the New Year in auto enthusiasts can get a bit of a spring in their step as they anticipate the new models of car that will be on sale.  This year we’ll be seeing numerous new models for sale in Australia.  Here’s the ‘’heads-up’’ for what’s coming.

The first quarter of 2017 will see the arrival of the Alfa Romeo Giulia, Audi S4 sedan and S4 Avant wagon, Mazda MX-5 RF, Mercedes Benz AMG E43, Mercedes-Benz E350e, Nissan GT-R Nismo, Skoda Superb Sportline, Toyota C-HR, Holden limited-edition Commodores, Holden Trax, Kia Rio, Suzuki Ignis, Maserati Levante, Porsche 911 GTS, the new BMW 5 Series and the Toyota Yaris facelift.

Alfa Romeo Giulia

Toyota C-HR

If speed is your thing then, perhaps, the most exciting car to drive in this bunch will be the new Alfa Romeo Giulia, Mercedes Benz AMG E43, Maserati Levante or the Nissan GT-R Nismo.  Nissan’s 3.8-liter twin-turbo V-6 will be hard to beat with its full-throttle 420 Nm, six-speed dual-clutch automatic and AWD powerhouse.  Expect a 0-100 sprint time of less than three seconds.  BMW’s new 5 Series is a ‘pearler’ – combining the best in family luxury and performance.  Holden’s limited edition models will be roomy and comfortable, while the Toyota C-HR looks really cool and is sure to be on the radar for those on the lookout for a new small crossover vehicle.

Roll on into the second quarter and we’ll see the new Hyundai Genesis G80 boasting a V8 5.0-litre option, however the flagship model still sits pretty with a 3.8-litre V6 alternative.  One thing is certain; the Genesis is quiet, large and luxurious.  Ride quality is excellent and the car feels well planted with good grip.

The new Holden Astra sedan will be another great alternative to other mid-size sedans.  We’ll see the new Lexus LC, Suzuki Swift, fast Mercedes-AMG E63 and the new Mercedes-Benz E-Class All-Terrain vehicles.

Want a new off-road king pin?  Then the last half of the year has Land Rover bringing in their next generation Discovery.  This one looks really good.  Staying with the off-road theme, a brand new model sees the Skoda Kodiaq rolling on in.  At 4.70m in length the Kodiaq SUV will be a roomy and practical wagon.  Other models to be on the lookout for are the Mercedes-AMG GT R, Haval H7 and interesting Volkswagen Arteon.

Volkswagen Arteon

Advance warning is always good, and this “heads-up” 2017 new car list is perfect for comparing and making choices over which new car to buy.

Governing for a Clean Vehicle Future

As the year approaches an end, several contentious issues appear set to spill over into 2017. Notwithstanding the farewell to Ford and Holden’s contributions to the manufacturing scene, the ACCC played a central role this quarter in defining a future framework applicable for all industry stakeholders.

 

Manufacturing

A sad juncture was reached in the local auto manufacturing scene, with Ford and Holden both drawing a line under production operations. The former closed its manufacturing facilities after 91 years of operation within Australia, while Holden closed the nation’s last remaining engine plant – it remains on track to conclude its production of vehicles in November 2017. A small consolation, Brisbane saw the opening of a manufacturing workshop intended to be a hub for producing solar electric vehicles.

Safety and Environment

In response to the ACCC’s issues paper released a few months ago, the AAA commenced testing local vehicles to gauge their performance against specified fuel and emissions numbers. Among the body’s early findings, real-world performance in these areas far under-performs the results achieved within lab conditions. While deceptive conduct has been ruled out, the extent of the discrepancies is leading to calls for vehicles to be tested within an on-road environment.

As a side issue, and one that will no doubt generate much interest in the coming months, the Federal Government is mulling whether to amend fuel efficiency standards to reduce emission levels. The risk to motorists however, is that regular unleaded fuel could be scrapped and they would be forced to pay more at the pump every time.

Lastly, Volkswagen Australia added another 35,000 vehicles to its recall and rectification program for local vehicles affected by the well-known Dieselgate saga.

 

Technology

Driverless vehicles took a step closer to their eventual roll-out within Australia, with a slew of initiatives and rumours from manufacturers like Audi, Tesla, Mercedes-Benz, Apple and Google. In Victoria, Bosch, VicRoads and TAC unveiled their own prototype for Australia’s first autonomous car. Across a wider scale, government ministers have agreed to facilitate testing of self driving vehicles within Australia over the next few years

The momentum behind alternative energy vehicles also continues to surge. The Adelaide government announced plans for 40 electric charging stations across the city in 2017. Meanwhile, the ACT intend to increase electric vehicle uptake within the public sector as part of a broader goal for zero emissions by 2050. Meanwhile, Toyota launched a local trial of the world’s first mass-produced hydrogen fuel-cell car, the Mirai.

Abroad, and the future of diesel powered vehicles could be set for a review, with Volkswagen one of the auto-makers weighing up the lifespan of the technology within the US market – often a forerunner for other markets.  Petrol and diesel vehicles could be banned within Germany by 2030, with a resolution passing the German upper house back in October – precipitating a move towards hydrogen powered vehicles.

Other technological highlights included:

  • Vodafone’s plans to allow vehicles to communicate with one another and avoid accidents
  • Supercapacitors could soon be used in place of batteries to charge electric vehicles in seconds
  • The SA Government investing $10m towards R&D plus testing for connected and autonomous vehicles

Source: afr.com.au

Regulatory Issues

The ACCC was heavily active this quarter, most emphatically with its issues paper for the new retail car market. The watchdog highlighted numerous issues it proposes to examine, including warranties, consumer rights, fuel and emissions practices, repair and service info, and much more.

Also within its sights, the ACCC focused on Tesla’s claims surrounding its vehicles’ self-driving capabilities – wary that the wording used by the auto-maker could frame consumers’ expectations. Rounding out the local scene, a pay per km scheme reared its head again, with the government now conducting an investigation into the proposal raised earlier this year.

 

A Few Biofuel Myths Busted

E10Tons of research is being done in the area of producing biofuels, even if you might not know this when you go to fill up your vehicle.  Heck, there’s whole scientific journals – several of them, in fact – dedicated to researching biofuels.  A lot of them cover obscure and hard to understand topics, like research to find particular bacteria that are capable of breaking down wood mass so it can be turned into ethanol, but someone’s got to do all the fiddly research if we want something sustainable to put into our cars.

Nevertheless, there are still quite a lot of misconceptions out there to do with biofuels.  Biofuels Association Australia, among other people, are doing their bit to educate the public and expose these myths for what they are.  Some of these things might have been true in the past but all that research has changed things – but general thinking doesn’t seem to have caught up.

Here’s a handful of these myths that we need to say goodbye to. How many are you guilty of believing?

Myth #1: E10 and similar biofuel blends won’t work in my car.

The truth: If your vehicle was made after 1986 and can run on regular unleaded petrol (91RON), it can run on an E10 blend (that’s 10% ethanol mixed with the petrol) without any hassles.  Higher proportions of ethanol and cars that need 95RON or 98RON may be another story and you’ll need to talk to the manufacturers or the petrol companies about whether this will be OK.  If you’re not sure about your car and whether it can run on E10, check it out on the E10 OK website https://e10ok.initiatives.qld.gov.au/. (If you’ve got a diesel engine, we can tell you right away that no, you can’t use E10. E10 is petrol.  Look into biodiesel instead.)

Myth #2: You have to convert your car before you can use biofuels.

The truth: Once again, if your car was made after 1986 and can run on regular 91RON unleaded, it can take E10 without any hassles.  The same goes for your lawnmower, your truck, your motorbike, your boat – anything with an engine.

Myth #3: Biofuels aren’t all that hot for sustainability because they compete with food crops for water, land and fertiliser.

The truth: This can be the case with biodiesel that’s sourced from corn oil. However, the big push these days is to make the most of waste products from the food industry, such as leftover pulp and residues from Australia’s famous sugar industry, wood chips from papermaking, brewery residues, etc., etc.  In the biodiesel department, they know that the competing resources issue is a problem, so they’re doing things like researching crops that produce food and biofuel feedstock at the same time, biofuel crops that grow on land that’s no good for food or that can cope with less water, and algae that grow happily in your local sewage pond.

Myth #4: Biofuels cause deforestation.

The truth: For a start off, this certainly isn’t the case here Down Under, as the waste from the sugar industry keeps up a good supply of ethanol.  As a matter of fact, this is also the case in Brazil, which also has a big sugar industry – no, they’re not cutting down vast tracts of the Amazon to grow biofuel stocks.  To be fair, they may have cut a bit down a long time ago, but most of Brazil’s sugar industry is located a long way from the Amazon.  It’s kind of like saying that Queensland’s sugar industry is causing deforestation in Kakadu National Park in Northern Territory – Brazil has about a million square kilometres than Australia, don’t forget.

OK, if you want to get really technical, some of the industries that produce the waste that gets used to make ethanol may have cut down bits of forest that they shouldn’t. However, it’s not the biofuel that’s to blame here but the original industry.

Myth #5: My vehicle won’t have as much power if I use an ethanol blend in it.

The truth: Actually, ethanol has a higher octane rating than petrol, according to Biofuels Association Australia, so you may end up getting more power instead of less with a biofuel blend.

Myth #6: Biodiesel is hard on fuel lines and gaskets.

The truth: this will depend on how old your car is and what your fuel lines are made of. If your vehicle is on the older side and/or you’ve got rubber gaskets and fuel lines, biodiesel will attack the rubber, as it’s a stronger solvent than fossil fuel-sourced diesel.  Have a wee chat with your mechanic to see what the innards of your vehicle are made of – if they’re not rubber, you should be all good.

To find out more about biofuels in Australia at the moment and find out the latest, have a browse around the Biofuels Association Australia website (http://biofuelsassociation.com.au/).

 

 

 

Is it Time for Extensive ‘Lemon’ Laws?

As recently as last month, consumer advocates and legal groups were once again campaigning for the introduction of extensive lemon laws. Australian consumer laws have long been considered inadequate for motorists who purchase new vehicles, only to see their purchase turn out to be a dud – in fact, a ‘lemon’.

This time, the lobbying extended further, with several groups joining together to put pressure on the government to make the necessary changes. With bodies such as the Consumer Credit Legal Service and Legal Aid NSW behind the push, are motorists overdue a change in legislation?

When we consider consumers’ entitlements to said respite, it’s worth noting that Australia trails its international peers by some margin. Major countries such as the UK, the US and Singapore are well ahead in this area. Consumers are protected by laws that dictate the number of permissible faults in a new vehicle, as well as the length of time such vehicles are allowed off the road due to any given major fault or combination of faults. Should a vehicle encounter more issues, or remain off the road longer than guidelines permit, the owner can notify an auto-maker about the fault(s) and request its repair, or an appropriate refund.

CR-Cars-AH-Lemon-Car-12-15

Source: consumerreports.org

In Australia however, there is a shortfall in coverage regarding major vehicle failures, with customers expected to work with the retailer to resolve the problem – often leading to an escalating level of frustration when the problem is often unable to be identified. Among other concerns noted by lobbying groups and proponents of legislative changes, motorists are often burdened with repair costs that are disproportional compared to the price paid for the vehicle. In this respect, the sale of faulty second-hand vehicles attracts more attention, as consumers have even less legal protection.

Currently, one of the fundamental issues to navigate is a system where the customer is treated in a manner befitting of their fault being assumed. Understandably, with some customers looking to take advantage of certain scenarios, it is unfortunate things have unfolded in this manner. Motorists are responsible for demonstrating the vehicle’s defects. In practice, this works against the theory of affording consumers protection for products which they do not have an expert knowledge about

Predictably, motoring bodies are opposed to any legislative changes, suggesting there is no need for change. They argue motorists have sufficient access to recourse as it is, and assessments would be significantly open to interpretation. While there might be merit in the second statement, specialist panels with expert assessment are being touted as an appropriate option, while delicate wording would ease the degree of interpretation required. In the case of ambiguous interpretations, there is hardly any evidence to suggest that the current scope provides a better approach to deal with such concerns – particularly when one considers the use of vague references regarding rejection periods and a high threshold for time off the road.

man-on-phone-with-broken-down-car-main

The government would also be wise to separate and distinguish motor vehicles as requiring a separate form of consumer protection from standard items. After all, with vehicles likely to be the second largest purchase in one’s lifetime, the acquisition should not be understated with respect to its importance. And it goes without saying, the impediment of a non-functional vehicle is likely to have other ramifications on one’s personal and professional life.

With local vehicles surpassing previous all-time figures for recalls (albeit, with only a portion related to faults), and reliability data already withheld from consumers, it’s clear that manufacturers and motoring bodies also have a vested interest in retaining ambiguous legislation to uphold their reputation. Moreover, it also serves well to inhibit a customer’s avenue to recourse.

The key step is transparency. Quality control will only improve through continual feedback and learning. And whilst ‘naming and shaming’ is certainly not the intended course of action, a renewed focus on the number of faults experienced by certain manufacturers should be means to promote an improvement in build quality, which should then make interpretation of defects a whole lot easier.

 

 

 

Was an Exit Ford’s Only Option?

Last week marked the end of an era for the automotive industry within Australia. After 91 years, the blue oval badge that many Australians came to love called time on the local manufacturing of its vehicles. The day was a bittersweet moment. On the one hand, the brand, the company and its tireless employees were recognised for their invaluable contributions over the years.

Sadly however, an abundance of job losses as well as the demise of a true Australian icon will leave a void within the nation’s proud history and culture. The manufacturer’s peers are in no better position, with Toyota and Holden also approaching the end of local production in 2017. But was this the only option available? Was it possible for Ford’s local manufacturing operations to be spared a lifeline?

Despite its late efforts to adapt to consumer and industry changes (e.g. economical driving), Ford was always going to be facing an uphill battle. As wage growth peaked in the mid-2000’s, labour costs continually drifted further and further away from those of nearby countries. Throughout Asia in particular, labour costs remained arduously low, incentivising numerous manufacturers to set up their regional operations for the Asian market amongst low-cost producers. To say that our nation’s positioning worked against the company would be an understatement.

ford

Also weighing against the company was the particular requirements befitting right-hand drive vehicles. Although in theory this shouldn’t have impeded the prospects of exporting to neighbouring countries in Asia, said nations were instead able to capitalise on their low-cost positioning. These requirements also prevented Ford from exporting to the likes of the US or other parts of the world. When the local arm of the company sought permission to produce the Ford Falcon in left-hand drive (several times in fact), its parent company in the US was having none of it. The economies of scale were never there to provide efficiency gains.

When the company’s changes did come, they were usually slow-moving or reactive in nature. As the Falcon continued to be pushed heavily by the company, the likes of the Ford Territory (and its successors) and Ford Focus hatch were overlooked for too long while competitors made advancements. In the last 20 years, Australian SUV sales have increased over 20 fold. The corresponding market share has increased from around 8% in 1995, to approximately 37% by the end of 2015 – and these numbers continue to rise. Meanwhile, passenger vehicles have gone from approximately 77% to 43% market share in the same period.

2016-Ford-Falcon-XR8-Sprint

Ford was also largely propped up by government intervention and regulation. Not only were taxation benefits and direct financial aid afforded to the company, but the market had to be ‘artificially’ managed by way of taxes and duties after it had been opened up in the 1980’s to allow motorists greater access to imports. The introduction of a luxury car tax and import tariffs sought to all but direct customers towards our local vehicles but consumers followed their needs.

While the effects of a recently overvalued Australian dollar did not impact Ford as it did with Holden and Toyota, government assistance became a necessity to prop the company upright – across the industry, this is believed to be $12bn over the last 20 years. With each year that passed, the prospect that Ford’s production could remain viable within our market became increasingly dim. And ultimately, all the major parties in this story bear some degree of responsibility for Ford’s sad farewell.

Q3 2016: Partnerships and Technology Signal the Beginning of a New Era

While some of the issues from earlier this year continue to hold the attention of the industry, partnerships and technology took on a large role this quarter following numerous developments.

 

Manufacturing

The biggest talking point still concerns Volkswagen, which has plunged into legal disarray around the world. Numerous governments have now taken action against the auto-maker for its Dieselgate saga, while locally a class action was instigated and the ACCC took the company to court.

Volkswagen have argued the local government is delaying them from implementing fixes to Australian-delivered vehicles, while the Federal Court cited frustration with the way the manufacturer is cooperating with proceedings. In August, Volkswagen’s operations were further impacted after contractual disputes with its suppliers in Germany and Brazil.

Brexit has resulted in several manufacturers weighing their ongoing operations within the UK, illustrated most by the Japanese government issuing strong advice concerning its contribution to the UK economy.

July 29 marked the final local production run of Ford Falcons, which was recently followed by engine production ceasing on September 26. For now, Holden will shut its engine plant in December this year, a year ahead of the scheduled conclusion of the Commodore range.

Numerous partnerships were also forged during the quarter. Ford signed an agreement with ridesharing business Carhood, which offers motorists free airport parking in exchange for renting out their vehicle. Apple was rumoured to be in discussion with McLaren regarding an acquisition, however this was later denied. Autonomous vehicle partnerships included Volvo and Uber, as well as Hyundai and Google, while Volkswagen will partner with Chinese company Anhui Jianghuai Automobile to develop electric vehicles in China.

Source: Fortune.com

Safety and Environment

Driverless vehicles encountered their first major hurdle during June, with one of Tesla’s vehicles involved in a fatal accident after it was unable to distinguish between a white truck and brightly lit sky.

The AAA announced that it would begin to conduct real-world testing for vehicle tailpipe emissions, coinciding with research from Beyond Zero Emissions, which illustrated the potential for a 6% reduction in greenhouse emissions if all Australians converted to 100% renewable electric vehicles. Supporting the momentum were reports that state governments may soon offer motorists’ incentives to take up renewable electric vehicles, with the federal government also mulling whether to scrap the Luxury Car Tax for such cars.

 

Technology

Despite Tesla’s autonomous vehicle incident, manufacturers still continue to make preparations for self-driving vehicles. Just one example, BMW, in partnership with Intel and Mobileye, are aiming for a 2021 release. Framework preparations are also under way around the world – Australia’s current road network is being mapped for machine-reading; black boxes will be required for such vehicles in Germany; and the US released driverless vehicle safety guidelines.

Meanwhile, other technology developments during the quarter included:

  • Honda developing a car that can detect a driver’s emotions
  • Hyundai and Toyota pushing for hydrogen technology within Australia by 2018
  • Airbus assessing the viability a flying vehicle
  • Audi are currently looking into: in-car Wi-Fi; electric vehicle sales being 25% by 2025; vehicles that communicate with traffic lights; and energy recuperating shock absorbers
  • Infiniti unveiled the world’s first market-ready, variable compression ratio engine
  • The first driverless bus was unveiled in Perth in late August

Audi led the way with innovative technology this quarter

Regulatory Issues

Locally, the NSW government made the controversial decision to boost its support of E10 petrol, which has thus far failed to gain any material traction within the market.

At a broader level, the government’s plan to tackle emissions through stricter standards have led motoring groups to caution drivers about the prospect of cost increases associated with new cars.

Lastly, legal and motoring bodies made renewed calls for the introduction of “lemon laws” to protect new car buyers.