Tim O'Brien | Nov 10, 2008 | 8 Comments

The Federal Government today handed down its response to the Bracks Review of the Australian Automotive Industry at the Automotive Centre of Excellence in Melbourne. The Government's response, 'A New Car Plan For A Greener Future', will provide a staggering $6.2 billion in assistance to local manufacturers over thirteen years. Of these grants, $3.4 billion is targeted to the 'greener assistance program', the Automotive Transformation Scheme.

Additionally, an expanded Green Car Innovation Fund of $1.9 billion is to be brought forward to 2009 and to run over ten years. LPG is to get a boost with a $10.5 million expansion of the LPG vehicle scheme, beginning immediately, that will double payments to purchasers of new private-use vehicles that are factory-fitted with LPG.

Other significant funding initiatives include $79.6 million to the Automotive Competitiveness and Investment Scheme; $116.3 million to assist structural and labour market adjustments through mergers and consolidations; $20 million to assist suppliers integrate into national and global supply chains, and $6.3 million for an enhanced market access program.

"If we want the Australian car industry to prosper, we have to make it stronger - more innovative, more productive, more competitive and more export-focussed. That's what A New Car Plan For A Greener Future aims to do," Prime Minister Kevin Rudd said.

The new Government plan, in raising assistance to $6.2 billion, adds $3.2 billion in net new funding to the $3 billion previously pledged by the Federal Government.

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The aptly named Senator Kim Carr, Minister for Innovation, Industry, Science and Research, said that the new plan "will revitalise an industry that is critical to the Australian economy and Australian community".

Of course, while this plan will no doubt be welcomed by local car and component manufacturers, things globally may yet overtake the Australian vehicle manufacturing sector. Our national industry is tied to the fortunes of the parent companies. In the third quarter of 2008 alone, GM US lost nearly half the amount pledged by the Australian Government to the industry here over 13 years (GM posted USD$2.5 losses for the quarter). Ford US is in similar dire straits.

Reports from the US suggest that GM has only a five year commitment to the Pontiac G8. Development dollars for new models - new Commodore, Falcon and Territory - will be very thin on the ground from those two 'parents' should Holden or Ford Australia have the hand out. Furthermore, with little more than a 20 percent market share between them, funding the development of replacement models from within Holden and Ford Australia - even with the assistance of 'green funding' - would seem to be a very tall order.

Ford's global 'One Ford' strategy, would also seem to signify difficulties ahead for the Falcon and Territory, 'a greener future' notwithstanding.

The problems for the local industry will likely persist.

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