Carbon tax will increase car cost

An anonymous industry spokesman told Carsguide "It (carbon tax) has no advantage to Australian manufacturing. Businesses would simply go offshore. The Camry made in Australia is also made in Thailand and so are its parts."

Toyota, which makes the Camry, Camry Hybrid and Aurion sedans in Victoria, foreshaodwed price rises of about $250 a car under the tax. Toyota Australia president Max Yasuda said a carbon tax of $25 a tonne would cost Toyota around $25 million annually.

"If it is not planned and managed effectively, the yet-to-be-defined carbon tax has the potential to heavily impact local automotive manufacturing, which employs 47,000 people," Mr Yasuda said.

Australian car industry sources says wtheir company's would be forced to source components from overseas especially alloy parts such as engines, wheels and suspension parts to avoid big tax charges.

The carbon tax would impact all manufacturing in all industry segments, but hit aluminium products hardest because of the high energy production cost. An industry spokesman, who did not wish to be named. said if car makers had a choice of using Australian alloy component makers paying a carbon tax, or buying the same product from a country that didn't pay the tax, it would choose the latter.

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"It (carbon tax) has no advantage to Australian manufacturing," he said. "Businesses would simply go offshore. The Camry made in Australia is also made in Thailand and so are its parts.

"Thailand has no carbon tax. It even has a free trade agreement with Australia. You don't have to think about it too much to see the potential damage to Australian manufacturing and employment."

ACTU president Ged Kearney has said there was a "strong argument" for carbon tax to protect emissions-intensive trade-exposed industries, such as foundries. Mr Yasuda agreed that Australian operations would be at a disadvantage when competing against countries which had no carbon tax.

"The business is already under competitive pressure from overseas vehicle importers and Toyota Australia's capacity to invest in low-emission technology relies on the profit the company makes," he said.

"If under a carbon price, the business is trade-exposed and it cuts into our profit, we could struggle to find the capital to invest. Toyota Australia needs to know what the price of carbon will be, when emissions trading will commence and what transitional assistance will be provided to industry to protect important export markets and Australian manufacturing jobs."

Ford and Holden would not comment on the effect of the carbon tax on their businesses.