The Australian Auto Market was steady for 2006 and continued its strong run of 10 years by achieving its second best year on record. A stable Government, strong economy and a general feeling of wealth all contributed to the strong sales result.

Looking at the numbers closely and we start to see some changes that occurred in several market segments as the impact from the fuel crisis took its toll on the more fuel inefficient large passenger vehicles and raised the sales volume of smaller cars.

Domestic sales volume now makes up about 20% of all sales and will possibly diminish more as the consumers buy more imported fuel efficient cars and turn away from the Australian Designed 'family cars'.

Much development effort over the past several years has gone into producing high performance vehicles that handle to 'European standards' to attract the fast money. Cars that today are less relevant than a few years ago as fuel prices bite the boy racers wallet. This has possibly been at the expense of developing a locally built diesel engine. It is hard to believe that Ford or GMH have not seen fit to offer a diesel alternative to their line up of petrol engines. Once again they are caught flat footed as the market changes are moving away from their offer.

Future risks are the actual break even point for annual production. Common knowledge suggests that an OEM needs to produce 60,000 vehicles of one model per annum to make money. Certainly Mitsubishi are a long way from that target. Without an export strategy how can the South Australian Government sensibly call for assistance from the Federal Government by getting them to delay the lowering of the import duty?

The lowering of import duties combined with the strong dollar will increase the availability of leading edge imported products. Add to this the desire for fuel efficient and high performance diesel engines from the higher quality diesel fuel and the local OEM's are likely to suffer more. We see that the automotive retail landscape will continue to evolve with the consumers being the winners.


Perhaps the argument for a lowering of the National fuel consumption will take on more weight due to environmental concerns than protecting a few thousand jobs. Sounds like a problem for environmental evangelists like Peter Garrett.

The opportunity for Chinese OEM's to enter the market is clear. Their investment needed to meet or exceed the emission standards is the same as their European export push. The only road block is their ability to produce a right hand drive vehicle and several have already built these vehicles.

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Robert Lane has over 20 years experience in the retail automotive industry and 10 years of automotive business consulting experience. He is currently a partner and senior consultant for Comengine Automotive Consulting China in Shanghai. For more article like this one visit Automotive Industry China News.