President's report 2012
Strong sales at the end of a challenging year
For only the fourth time in the history of the Australian automotive industry, sales of passenger cars, SUVs and commercial vehicles exceeded one million in 2011. Motorcycle, scooter and all-terrain vehicle sales grew by three per cent during the same period with sales of just over 109,000 vehicles. This was a very pleasing result given the extreme weather events that had devastated many Australian communities, the global uncertainty which overshadowed the Australian economy and natural disasters which impacted on key product supply areas.
The achievement highlighted the determination of the Australian automotive industry to be successful within one of the world’s most open and competitive markets. This determination continues and can be seen in the continued strong sales for the first quarter of 2012.
Contributing to the environment
Last year FCAI sought to maintain our industry’s competitiveness by drawing the Government’s attention to the potential negative impacts of carbon pricing on our sector, estimated to be in the order of $30 million to $46 million a year even with compensation for emissions intensive trade exposed industries. This is a cost that we cannot afford to pass on to customers and will have to absorb into already tight budgets.
FCAI is working with the Government to develop a meaningful and effective CO2 emissions standard for new motor vehicles in Australia. Average vehicle CO2 emissions fell by 2.8 per cent in 2011, following a similar decline in 2010. This means that the average new car sold in Australia in 2011 was at least 20 per cent more efficient that it was a decade ago.
While the industry continues to play its part by introducing new technology aimed at improving fuel efficiency and reducing emissions, consumer preferences for vehicles and fuels will also be a major factor in achieving significant further CO2 reductions. This year we are also working with the Australian Government on an emissions standard for passenger vehicles that is proposed to commence in 2015. The standard is a major policy issue for FCAI and its members, and will require intense negotiation to ensure the industry’s voice is heard loud and clear by the Government.
Meanwhile, work continues on the Green Vehicle Guide. After consultation with FCAI and its members, the Department for Infrastructure and Transport proposed the star ratings in the Guide be replaced with a single CO2 emissions score from 1 January 2013. A revised scheme will be developed during 2012 by FCAI and the Government.
Safer cars – an industry priority
Each year, cars are getting safer due to the commitment and considerable investment of the automotive industry in advanced safety technologies. In 2004, only 14 per cent of cars tested in the Australasian New Car Assessment Program (ANCAP) scored 5 stars. In 2011, this figure had risen to 72 per cent. Today, nearly 9 in 10 new cars are either 4 star or 5 star according to ANCAP, with all Australian made vehicles being 5 star rated.
Agreement was reached between FCAI and ANCAP for a Road Map which outlines the requirements for each of the star ratings up to 2016. Ratings between 2013 and 2016 to retain a 5 star rating will require improved pedestrian protection, ratings from new whiplash and roof strength tests along with a range of new mandatory safety features.
The automotive industry strongly supports new active safety technologies such as electronic stability control (ESC) and head protecting side airbags (HPSA). All new cars entering the Australian market now have ESC. The industry also achieved its target of supplying 80 per cent of passenger cars, vans and selected classes of SUVs sold with HPSA by 1 January 2012. The automotive industry continues to develop and introduce new technologies such as adaptive cruise control, lane departure warning systems and vehicle to vehicle communication.
FCAI was involved in the P-Drivers project, launched in October 2011, with the FCAI Chief Executive speaking at the launch on behalf of the non-government partners in the project. The project will run over many years and involve up to 28,000 young drivers in Victoria and NSW. Results from the course will be used to ensure the most appropriate driving programs are in place for young drivers, who remain over-represented in deaths and serious injuries on Australian roads.
Agreement was reached between FCAI and road authorities to introduce a new scheme covering restrictions placed on vehicles driven by P-Plate drivers. The proposed scheme, which is yet to be approved by relevant Ministers across Australia, will involve a simple threshold based on power to weight ratio. This will mean that any vehicle below 130kw/tonne - including low powered turbos - will be approved for P-plate drivers. During 2012, FCAI will work with Austroads to progress the proposal to Ministers for approval and continue to develop interim arrangements while legislation is changed in each applicable State to implement the new scheme.
Challenges faced by the industry
During 2011, the FCAI and its members were involved in a number of key issues including:
Taxation matters
The industry remains opposed to the Luxury Car Tax (LCT) in its present form and continued to express concerns to the Federal Government.
Proposed changes to the Transfer Pricing rules were opposed by FCAI, with representations and submissions made through the FCAI Tax Committee during 2011. This issue will continue to be a focus in 2012.
Trade Issues
The industry appreciated the opportunity to be involved in discussions around a number of trade agreements including with Malaysia, Korea and across the Pacific (Trans Pacific Partnership) and will continue to press for changes to support the automotive industry in Australia. FCAI is working with DFAT to ensure genuinely reciprocal Free Trade Agreements are achieved.
Consumers
The Australian Consumer Law (ACL) has the potential to provide the automotive industry with serious concerns in terms of its consumer implications particularly around the definition of a major failure and the subsequent rights of consumers for a refund or new vehicle. FCAI made a number of representations and submissions during 2011 and will continue to pursue this issue with the Federal Government in 2012.
FCAI also made a submission to the Commonwealth Consumer Affairs Advisory Council (CCAAC) in response to their issues paper “Sharing of repair information in the automotive industry”. FCAI discussed the level of service and repair information made available to the independent repair sector with key stakeholders, and continued to maintain that the information currently available is more than adequate. During 2012, this issue will demand on-going FCAI involvement with CCAAC and key stakeholders.
ATV safety – roll over protection
FCAI and its ATV members continue to oppose the fitment of any form of roll over protection (ROPs) to ATVs (quad bikes). This is based on investigations that show ROPs can cause more injuries than they prevent. FCAI does however strongly support the need for ATV riders to wear helmets, undergo training and ensure people under the age of 16 do not ride an adult-sized ATV. In 2012 FCAI will publish a Code of Practice for ATVs.
Ports
Members have challenges in every port of Australia. At Port Kembla, FCAI is working with Bluescope Steel to determine ways to ensure industrial fallout does not affect vehicles stored nearby. At Townsville, FCAI has been active in trying to broker a way for car ships to be given some priority for unloading (a process that takes a few hours) ahead of sugar or cement ships which take some days to unload but have an agreement with the port authority. At the Port of Brisbane, large increases in fees applied by Australian Amalgamated Terminals (AAT) were objected to by FCAI through a process established by the Australian Competition and Consumer Commission (ACCC) that led to a much lower increase being applied.
Much of the attention in 2011 was given to the proposal of the Victorian Government to undertake a feasibility study into the relocation of the automotive trade from the Port of Melbourne to the Port of Geelong. FCAI is strongly opposed to this move as it will be more costly for the industry and the Port of Geelong is inadequate in terms of ship access and storage. In 2012, FCAI will be pushing for an upgrade of Webb Dock West at the Port of Melbourne as an alternative.
Auto manufacturing still matters
On the manufacturing policy front, Australia remains one of a select group of nations with the ability to take a new motor vehicle from first concept through to final manufacture. Around the world governments are bending over backward to secure new investment in automotive manufacturing and every major automotive producing nation has some form of co-investment, or partnership involving industry and government.
Over many years, successive Australian Governments have implemented policies to progressively open the Australian automotive market to the world, while ensuring that Australia remains an attractive and viable location for international investment in automotive design, engineering and manufacturing.
Last year’s decision by the Government to abolish the Green Car Innovation Fund was deeply disappointing for Australian automotive manufacturers, and a particularly unsettling one from a business certainty perspective. Given the nature of the new model development cycle it is essential that local manufacturers (and international parent companies) are able to rely on a strong level of certainty and stability about the policy environment in which they operate. We therefore welcomed the Prime Minister’s subsequent commitment that all other parts of the new car plan would be retained.
Clearly, an ongoing key role for FCAI is to raise the awareness of political decision-makers and the broader community about the significant economic benefits that accrue to Australia from having a strong and viable automotive industry.
The automotive industry needs bipartisan support for a long term industry policy that ensures jobs are retained in manufacturing and associated areas, opportunities exist for young people to gain skills in design, engineering and associated technologies and Australia retains a world class knowledge base through research and development.
FCAI continued to promote events aimed at raising the profile of the industry with key stakeholders and the community. The FCAI AGM and Annual Dinner were held at Parliament House, Canberra during 2011 with attendance at the dinner approaching 250. The Friends of Manufacturing event was also held at Parliament House with strong attendance by key ministers and parliamentarians. FCAI participated in the Tax Forum and Jobs Forum in September 2011 and was represented at the ALP National Conference in November 2011. The latter provided an opportunity for FCAI to meet with and provide information to several key cabinet ministers, including the Federal Treasurer.
For the first time in 40 years, the FCAI President addressed the National Press Club of Australia with strong attendance including MPs, FCAI members and interested stakeholders. This event was broadcast nationally and received wide praise. Mike Devereux spoke on “Make it in Australia; why manufacturing matters” highlighting the role of the vehicle industry in sustainability and innovation.
The two key motor “shows” held during 2011 were an outstanding success. The Sydney Motorcycle and Scooter Show drew attendances well above expectations and the Melbourne International Motor Show attracted the highest attendance for many years.
Recognising the contribution of FCAI staff and Board
The task of achieving effective and well-designed policy and regulatory outcomes for the Australian automotive industry was a considerable challenge for FCAI in the past 12 to 18 months, notwithstanding the fact that there were changes to key personnel.
We bade farewell to FCAI Chief Executive Andrew McKellar in mid-2011. Andrew served the organisation with distinction for a decade, including four years as Chief Executive. Respected former industry department official, Steve Payne, then provided stewardship to the organisation for three months as Interim Chief Executive until our current Chief Executive, Ian Chalmers joined the secretariat towards the end of 2011.
On behalf of the FCAI membership, I would like to thank the past and present secretariat team for their endeavours during the past year on behalf of the Australian automotive industry. The effort required to protect the sector’s best interests in an exceptionally difficult year did not go unnoticed nor under appreciated by us.
I would also like to thank my fellow Directors on the FCAI Board for generously contributing their time and wise counsel to the collective benefit of the industry during what was a difficult year commercially.
With the recovery of vehicle sales in the second half of 2011, FCAI and its members look forward to another strong year but do not underestimate the political and policy challenges that await us in 2012.
One certainty will strengthen our case and our resolve: we have a great industry, which forms a vital part of most Australians’ everyday quality of life. Nobody can afford to take it for granted.
BOB GRAZIANO
FCAI President