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"Australia Autos Report Q1 2014" Now Available at Fast Market Research

New Transportation research report from Business Monitor International is now available from Fast Market Research


Boston, MA -- (SBWIRE) -- 01/09/2014 -- Since our last quarterly update, the Australian people have voted in a new Liberal-National coalition government. The new Prime Minister Tony Abbott has said that his government will now look at the financial assistance pledged to the auto industry by the former Labor administration and BMI believes that the domestic auto industry is now at a crossroads. Should the Abbott government fail to provide sufficient financial assistance moving forward, we believe there could well be a withdrawal from production by one or both of the two remaining local automakers.

The arrival of the new Liberal-National coalition government certainly spells tough news for the car industry at face value. Prime Minister Abbott has been unmoved on his stance to cut the previous Labor government's funding to the automotive industry under the automotive transformation scheme by AUD500mn (US$475mn), which will leave automakers with funds of only about AUD1bn (US$950mn) for the remaining years up to 2015. This, of course, has raised alarm bells among Victorian and South Australian state governments, given that a withdrawal by the current automakers could cause a significant spike in job losses.

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Despite the adverse impact on jobs, some politicians from the Liberal-National coalition remain implacably opposed to further taxpayer handouts to auto manufacturers. As locally produced cars wrestle with cheaper imports, while the expensive local currency also obstructs the industry's exports from making headways in the global market, the outlook for future production looks tenuous at best, and as such, it is unsurprising that the coalition government is reassessing pledges made to original equipment manufacturers (OEMs) previously.

BMI believes there will be an intense debate in parliament in the next few months on whether the government should continue to support domestic vehicle production (and the extent of support if so) and findings of the Productivity Commission (a taskforce set up by the government to assess the viability of the local auto industry), whose final report is due sometime in March 2014, will be crucial in influencing the outcome of the debate.

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