Australia
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
Tons 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.
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.
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.
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.
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.
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