Tuesday, 17 January 2017 11:20

The Australian automotive industry has gone through a change of seismic proportions. The "big three" could not be convinced that there was any long-term commercial viability in the market, and the politicians seemed content to sit back and manage the domestic industry's decline

Even though Australia is one of only a relatively small number of countries around the globe whose workforce is capable of building a quality car from start to finish, this, apparently, is not enough. It's been decided that the automotive industry here cannot compete on a global scale, and so, in export terms, it is about to become a thing of the past.

But, when one door closes, another one opens - at least for a significant sector of the Australian automotive field.

A Booming Industry

2017 will be a historic year; this will be the year in which the shutters are finely drawn down on the entire vehicle manufacture industry in Australia, at the same time as new vehicle sales hit a new record.

As recently as 2010, 63% of cars sold across the country were built in Australia. Since then there has been a meteoric decline in the domestic output, as the market shifts towards European made models. Since 2010, sales of European-made cars have increased by 31%, and the market share that was once the domain of the Australian-built vehicle is now shared equally among manufacturers in both Asia and Europe.

European opportunity stat 1

Why Are Australians Buying Euro?

What is persuading Australian customers to buy European? Certainly, aggressive marketing and category positioning can be cited as motivating factors. European cars are becoming increasingly affordable and are also synonymous with style. This is something that is increasingly attractive to buyers as Australian society grows more affluent. "With the demise of domestic manufacturers, the real choice at the macro level for Australian consumers is to go for perceived reliability in the Asian sector, or style and positioning from Europe," observes Andrew Ochudzawa, Director of RamSpeed Automotive.

Part of the reason for European brands such as Mercedes-Benz enjoying such an ascendance in Australia is their revised product line. Luxury brands like these have recognized that there is much to be gained from "bleeding" into the lower reaches of the market; by producing specific products that reflect the brand, but are suited to lower budgets. Now, the Australian consumer has the opportunity to buy a recognized luxury brand at an affordable price.

M-B has been active in designing and pushing new models into higher-demand segments and showrooms. BMW and Audi are not far behind in terms of the luxury brands. However, it is Volkswagen that is the standard-bearer at the vanguard of the European invasion, head and shoulders above the rest in 2015 sales.

European opportunity stat 2

Consequences of the European Wave

Industry predictions for 2018 show that European brands will occupy 30% of the market in Australia and that a large portion of new car buyers will be first-time "European" owners. European-made car stock in Australia is ballooning at an alarming rate, and this looks to be continuing. As the situation unfolds and the dust begins to settle, we can predict a significant opportunity for workshop owners who specialize in European brands. This business will only grow as more and more of these vehicles begin to make their way out of the dealer networks and falling out of manufacturers' warranty, or owners present their vehicles for service under their new, extended warranty (extended under Australian Consumer Law).

European opportunity stat 3

Consumers Looking for Help

When you consider that an estimated 485,000 "European" vehicles are currently coming out of new car warranty, where do the owners turn? This is a critical question as the 'post-manufacture' era dawns in Australia. European brands may well be renowned for style, but new owners are going to have to deal with challenges in relation to servicing, parts, availability and all important pricing.

European main-dealers are expensive with dealer labour charges often exceeding AUD$200 per hour and many service parts often at twice as much in relation to the equivalent original parts (OEM Parts) imported through specialist car repair shops and distributors. Consumers are going to need the help of these repair shops, which have the right overseas contacts, parts supply and specialize in selected European brands.

Consumers will be looking for a safety net and support network to help them manage their European cars. After all, these vehicles are notoriously more challenging to service and repair. "Repair shops need to employ more highly-skilled mechanics and invest a sizable amount in specialized diagnostic equipment, so they can service European brands," added Ochudzawa.

The New Opportunity

So as the doors close on the domestic automotive manufacturing industry, some big doors are opening for privately-owned vehicle service facilities, and repair shops. Consumers will not be able to take the "easy route" by selecting domestically-manufactured stock and it seems clear that the ratio of European cars as a percentage of the entire Australian market will increase. These privately-owned facilities can provide a valid alternative to the official European dealer network in Australia, their expensive costs and challenging availability.

European opportunity stat 4

Source: www.prnewswire.com, 13 January 2016

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