Coalition Government Money to Australian Car Manufacturers

In other words, far cheaper imports have flooded the Australian market. Indeed, local manufactures’ lack of competitiveness has resulted in falling sales volume (Whytcross, March 2014). Thus, based on the strategic trade theory, local companies like Gm Holden, Toyota, and Ford do not have a competitive advantage. Because the main idea of the theory is that trade policies can raise the level of domestic welfare in a give

For instant, China which enjoys plenty of human power which strengthen its competitive of export products (Curran, E. 2013). Australian manufacturers, therefore, have lower competitive power against imported goods and services. Although the total number of car sales increased, the sale of Australian-made vehicles has significant (20%) fall as Thurlow, R. & Glynn, J. 2013, stated. It seems barriers of entry blocked the auto making industry hardly.

Doing business in Italy is very different than in the United States. “Set to move onto a slow, but steady, path of economic growth;” Italy, at first glance, seems to be a promising business environment with projected increases in GDP per capita in the coming years, according to Business Monitor International (“Italy Autos Report” 30). However, there are many cultural, administrative, geographic and economic differences that make the business environment much different than that in the US. Generally dominated by domestic carmakers, mainly Fiat S.p.A., the auto industry in Italy doesn’t look very appealing for new firms because of the high barriers to entry. However, foreign carmakers like Ford have managed to penetrate the Italian market, with vehicles like the Fiesta, by focusing on small fuel efficient cars.

But since switching costs are not too high either, be it IMC’s biggest competitors or people using other means to avail a vehicle. It has been seen that a major decrease was faced by IMC when government allowed the usage of used cars for a long time as well as allowing smuggled cars to be used. Sales went down to an unexpected number. The amount of surveys by IMC also shows how much it values its customers (Nadeem, 2009). The economy of Pakistan has not been going through times where disposable incomes are enough to afford such a higher quality.

“The economy is down.” How much cash would you have if you had a dollar for every time you’ve heard that in the last ten years? American jobs are leaving the country, and at the head of this work migration was the auto industry. The idea is a car can be made for a fraction of the price in Japan and foreign workers don’t cause such a fuss. Sounds like a grand plan, there’s only one problem…why do you suppose our economy is down? Everyone else is taking our work, duh!

The decision was influenced by many different factors as well as having knowledge that the car manufacturing industry is economically taxing. The fact that the production of cars in Australia was already in decline made a transformation possible as well as Australia’s high cost and low productivity. This can be viewed, said by Paul Bloxham who is HSBC’s Chief economist, as “globalisation” stating that Australia could obtain the same low-cost manufacturing in relation to the rest of the worlds manufacturing regions. Toyota felt that the Australian dollar was extremely high, and in this case was hindering the company’s exports from functioning sustainably, making the trades unsuccessful. As the engine and car producing company became part of the global manufacturing market, many inexpensive production expanses were located which shrank the size of the Australian industry.

To what extent does the macro-environment affect Toyota Australia? The adverse macro-environment including the fiercer competition in local market due to Australia’s low-tariff barriers, the demanded vehicles of emerging markets in developing countries was counter to the types of Toyota manufactured, the small scale of operations limited by Australian market and population, the unbalanced free trade agreements and the adverse currency development. This would have significant effect on Toyota Australia’s decision of whether leave Australia or not. 2. What can Toyota Australia do as an industry leader when the whole industry is facing challenge?

With the intense competition in the global market, the comparative advantage of a country’s exports is the primary influence on that country’s export volume (Chunming & Wei, 2012). Australia does not have a co... ... middle of paper ... ...nfluencing investment decisions such as broad R&D support, education and training support (Allen Consulting Group [ACG], 2013). However, it is noticed that the government support for the automotive industry has reduced in Australia this recent years and the level of government support and policy certainty is not on the similar scale in Australia as compared in other countries (ACG, 2013). If globally competitive incentives are not provided, there is a more serious risk that the manufacturers will halt production. For example, the recent case whereby Abbott declaring that he will no longer be providing extra government assistance which led to the major manufacturers ceasing production one after another.

Tesla lost 70 million in 2013 even with the high sales of model S to debt and failure to attain arranged price deduction and operating fees. Tesla loosed more than $4000 on every Model S they sold, using its reckoning of operating losses (CNBC,2015). However, companies such as: Nissan and Suzuki may be losing customers even though of tesla's weakness since they have an electric vehicle that offers luxury as well as, eco-friendly. Toyota benefitted since they have finally developed their own fully electric car and is a financially stable

However, in the longer run, the effectiveness of the stimulus policies may not continue and decrease since most people who want cars will have brought cars and they may not change their cars in the near future. This decrease of the government’s tax revenue cannot continue in the long run so the government will increase the tax when the stimulus policies are no longer necessary. The carmakers and the government should observe the car market and apply suitable measures to keep up the demand so that China will continue to be the world’s No. 1 car market in the foreseeable future.