Australia
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.
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.
Level 2, 9 Help Street