Research paper on Automotive Industry in Australia

        The automotive industry works world widely in a range of companies and organisations which deals with design, development, manufacturing, marketing and selling of motor vehicles. The automotive industry is one of the major contributions in the economic sector by revenue (Gould, 2012).

The word automotive is derived from Greek autos (self) and Latin motives (of motion). This term was proposed by Elmer Sperry in 1898(A.Beşkese & Şakra, 2001).

        The automotive industry started in the 1860s with hundreds of manufacturer. The United States ruled the world in the production of the automobile for many years. Before the great depression, in U.S. one car was used for 4.87 persons. After the second world war, the U.S. produced almost 75% of the total production of the world (B.Talay & Cavusgil, 2009). In 1980, the industry was overtaken by Japan and Japan again became the largest manufacturer of the automobile industry. Japan rarely passed American items and this gives a loss to the US economy(Arlbjørn Stentoft & Vagn Freytag, 2013).

         After Japan, China took over the market and produced double as compare to the US. From 1998- 2012 US production is increased rapidly.According to the survey of 2017, currently China is ruling the world of the automotive industry and the US is at second rank(M.Sardy & Fetscherin, 2009).

         The automotive industry in Australia is not so developed, therefore Australia prefers to import as compare to manufacture it. With a glance at Australian’s industry, Inthe 20^th century, Australia creates a substantial industry through the plan of opening a plant with the assist of international manufacturers.  The first carmaker of Australia was Ford and the car manufacturer was Holden by General Motors. However the ford’s engine was closed in 2016 and after this Toyota and Holden both dissolved(H.Allmaier, Sander, & Reich, 2013).

1.      Five forces Model of Automotive Industry in Australia

        For any business, the best way to detect threats and risk to your business is to analyse the market competition. When an organization is well-aware about its competitors, and know how it will affect your work in future. Never mind you have an empire business or small local business, competition can influence the business directly(P.Maxton & Wormald, 2004).

         Mostly, business uses Porter’s five forces model to analyse the competition between the businesses. This model is developed by Michael E. Porter, which said, the five forces model cover five specific factors that determine whether the business is profitable or not (S.Goldberg & Campa, 2006).

The five forces model can explain the Australian automotive industry in detail. It covers the area of new entrants, competitors, buyers capacity and seller capacity in-depth(Kolle, Shankarappa, Manjunatha Reddy, & Muniyappa, 2015).

·         New Entrants of Automotive Industry in Australia

            The local business and small manufacturers are not strong enough to compete with multinational companies. The imported machinery put huge stress on the Australian car manufacturing industry. The decreasing effect of tax on car import, attracts a large number of foreign car manufacturer to export a large number of duty-free cars to the Australian market. As a consequence of this, these modes of exported cars bring a series of challenges for the Australian car manufacturer. As a result, many car manufacturers chose to retreat the Australian market to avoid competition(Ramita & A).

·         Existing competitors of Automotive Industry in Australia

            The Australian automotive industry mostly located in Melbourne and other cities. Australia has only four manufacturer brands including Holden, Ford, Toyota and Mitsubishi. Due to the limited volume of the market the existing manufacturer face horrible competition from each other. The population of Australia couldn’t fulfil the requirement of fast developing needs of people to a large extent(H.Friedrich, H., Schumann, & Schumann, 2001).

·         Threats of Alternatives of Automotive Industry in Australia

            There is a lot of alternatives fora car in our daily life like a motorbike, train, metro bus and others. With the increasing issues of traffic, the whole society person have to use public transport which is an alarming threat for the car manufacturer (J.Singh, Smith, & Sohal*, 2005).

·         Buyer’s ability of Automotive Industry in Australia

            People with high income, can buy different cars from other countries. They can enjoy modern information technology and get the latest information aboutthe car industry and compare this information with other countries and can get a better one. It is all about the buyer’s capacity that how will buyer deals with supplier.

·         Supplier capacity of Automotive Industry in Australia

            The automotive industry is a large part of the revenue generation. Sometimes, the manufacturer also supplied parts of cars to the customers which decrease the value of their customer who purchase the parts. The manufacturers are in loss position when they purchase parts from the supplier. They can design parts by themselves and can control the supplier to some extent (J. Van Biesebroeck & Sturgeon, 2010).

PEST Analysis of Automotive Industry in Australia

            PEST analysis is used to understand the growth of a particular market and the position of the business. PEST concentrates at Political, Economic, Social and Technological factors of an organisation(S.Yılmaz & Ustaoğlu, 2013).

a)      Political Factor  of Automotive Industry in Australia

            Political factors discussed the rules and regulations and security measures that can apply to the industry. Rules and regulations affect the automotive industry. The car manufacturers have to take a different political decision and care about environmental issues with the automotive industry.

b)     Economical Factors of Automotive Industry in Australia

            Economic factors mostly related to exchange rates, economic growth and certain business issues in the industry. At a certain time, there wasa high rate of car production which results in high revenue generation(M. I. S Noguez, 2003).

c)      Social factor of Automotive Industry in Australia

            Social factors are difficult to implement in the automotive industry. It takes into consideration the culture, demographics and people’s capacity.

d)     Technological factor of Automotive Industry in Australia

            It is a way to reduce CO2 in the air, which cause reducing the speed of battery in the automobile. Public use environment-friendly automobiles, the manufacturer used modern technology to manufacture the car.

2.      Explain why car manufacturers prefer to import rather than manufacture in Australia?

            In Australia, the automotive industry is not so much developed. In 2004, this was an end era of the automotive industry in Australia. Mitsubishi, was the very first brand, who close the manufacturing of cars in Australia(S.Salminen, 2004). In 2013, Ford also closed down the factories and like this, till 2017 all brands shut down their business in all terms (Blackhurst, Scheibe, & Johnson, 2008). The reason for this depression is as;

§  Irrationality

All the brands were irrational and ran the business with small care. Even Toyota was not completely irrational so it could survive till last. Tax policies were not suitable for the manufacturer so it can’t sustain for a long.

§  Bad deals

The Australian government imposed zero tariffs on imports cars. Free trade agreement proved such a nightmare for the economy. Due to the bad deals of government and manufacturers, the automotive industry vanished from Australia.

§  Labour cost

Australia is surrounded by developed countries, therefore labour is not available at a cheaper rate. It also a huge reason to end up with the industry (J, 1993).

§  Out of sight

In peak time, Holden and other brands built a big margin of cars but sold less. In that time the market was fully controlled by Japan and Korea.  The consumers were fully shifted to these imports which became the cause of their shut down(X.Li, Mao, & Qi, 2009).

References of Automotive Industry in Australia

A.Beşkese, & Şakra, A. (2001). A model proposal for supplier selection in automotive industry. In 14th international research/expert conference TMT.

Arlbjørn Stentoft, J., & Vagn Freytag, P. (2013). Evidence of lean: a review of international peer-reviewed journal articles. European Business Review , 25 (2), 174-205.

B.Talay, M., & Cavusgil, S. T. (2009). Choice of ownership mode in joint ventures: An event history analysis from the automotive industry. Industrial Marketing Management, , 38 (1), 71-82.

Blackhurst, J. V., Scheibe, K. P., & Johnson, D. J. (2008). Supplier risk assessment and monitoring for the automotive industry. International Journal of Physical Distribution & Logistics Managemen , 32 (2), 143-165.

Gould, J. E. (2012). Joining aluminum sheet in the automotive industry—A 30 year history. Weld. J, , 91 (1).

H.Allmaier, Sander, D. E., & Reich, F. M. (2013). Simulating friction power losses in automotive journal bearings. Procedia Engineering, , 68, 49-55.

H.Friedrich, H., Schumann, S., & Schumann, S. (2001). Research for a “new age of magnesium” in the automotive industry. Journal of Materials Processing Technology, , 117 (3), 276-281.

J, M. (1993). Exchange rate pass-through: Australian imports of motor vehicles. International Economic Journal, , 7 (3), 93-109.

J. Van Biesebroeck, & Sturgeon, T. J. (2010). Effects of the crisis on the automotive industry in developing countries: a global value chain perspective. . The World Bank .

J.Singh, P., Smith, A., & Sohal*, A. S. (2005). Strategic supply chain management issues in the automotive industry: an Australian perspective. International Journal of Production Research, , 43 (16), 3375-3399.

Kolle, S. R., Shankarappa, T. H., Manjunatha Reddy, T. B., & Muniyappa. (2015). Scholarly communication in the International Journal of Pest Management: a bibliometric analysis from 2005 to 2014. Journal of agricultural & food information , 16 (4), 301-314.

M. I. S Noguez. (2003). Ford and the global strategies of multinationals: The North American auto industry.

M.Sardy, & Fetscherin, M. (2009). A double diamond comparison of the automotive industry of China, India, and South Korea.

P.Maxton, G., & Wormald, J. (2004). Cambridge University Press. Time for a model change: re-engineering the global automotive industry. .

Ramita, V., & A, M. B. (n.d.). PEST Analysis for Indian Luxurious Car Market. 2013 .

S.Goldberg, L., & Campa, J. M. (2006). National Bureau of Economic Research. Distribution margins, imported inputs, and the sensitivity of the CPI to exchange rates (No. w12121) .

S.Salminen. (2004). Have young workers more injuries than older ones? An international literature review. Journal of safety research, , 35 (5), 513-521.

S.Yılmaz, & Ustaoğlu, M. (2013). Electric Vehicles Production in Turkish Automotive Industry and Sectoral PEST Analisys. Procedia-Social and Behavioral Sciences , 75, 10-17.

X.Li, Mao, Z., & Qi, E. (2009). Study on global logistics integrative system and key technologies of Chinese automobile industry. In 2009 International Conference on Management and Service Science , 1-4.