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Australia could be a dumping ground for cut-price European cars. Turmoil in European car plants as production plunges because of a weakening economy are making car makers turn their attention to marketing in more stable countries. Like Australia.
But while the move would threaten the existing hierarchy dominated by Japanese and Korean manufacturers - and further erode the share of local makers - it could prove a bonanza for Australia's new car buyers.
Desperate to maintain production, European factories are looking for new markets for its cars - many not previously available here - that may come at bargain prices. Victorian Automobile Chamber of Commerce executive director David Purchase warns that overseas manufacturers may flood our market with unwanted vehicles.
“‘There would be more consumer choice and increased competition would result in lower prices,'' he says. ‘But there's a big difference between the benefit of greater consumer choice and lower prices, and dumping.'' He says that over exposure, or “dumping”', would be an issue for dealers in Australia.
“The local retail automotive industry is currently buoyant but a sudden increase of imports would cause instability. “Dealers would be put under pressure and they would be wary of investing heavily in land, stock and equipment for new stand-alone franchise sites, in case the brand fails or is short lived.''
Opel this week says it will halt production for 20 days and cut the hours of workers at two of its four German plants - which make the Astra and Insignia - in response to a drop in demand for cars in Europe. “The European car market is declining substantially,'' Opel says in a statement.
The high Australian dollar, which favours imports yet punishes exports, will ensure European cars will be very competitively priced in our market. One likely candidate is a small car from Kia. The company this week in Europe launched a wagon version of its small-size Cee'd car.
This model is sold throughout Europe including the right-hand drive UK market. Kia Australia won't confirm plans to import the Cee'd but a spokesman did concede that “no new idea is off the table''. Cee'd is built at Kia's factory in Slovakia and is made alongside the Sportage for European markets.
The Cee'd Sportswagon - which is noted for its large 1642-litre rear cargo area - follows the launch in Europe of a five-door hatch. The Slovakian factory will debut a three-door Pro-cee'd model at the Paris motor show ahead of its 2013 launch.
This coupe includes a turbocharged version - using the same 150kW/265Nm engine as the Hyundai Veloster Turbo - to compete with the Volkswagen Golf GTI and Opel Astra GTC. The sums are being done on these models to see if they make a business case for Australia. That's not all - Kia and Hyundai plants in Korea can't make enough diesel engines to supply markets such as Australia but they may now come from Europe.
The two Korean-based companies are not alone. Opel, which is slowing production in line with falling demand and is under pressure to close a factory, this month started selling its cars in Australia. Car makers could look at European-made product and - for perhaps the first time - consider them for the Australian market.
Ford makes most of its cars in Europe and may be able to either increase volume or lower the prices while Honda makes the Civic and CR-V SUV in the UK. Toyota also makes the Camry-sized Avensis wagon in the UK and exports it to Japan, and makes diesel engines and the Yaris small-car in France. Australia currently doesn't market the Avensis and gets its Yaris from Japan.
But with the favourable currency rates and the need to boost - or maintain - production levels in Europe, the UK could be the source for some Toyota models and components. Nissan has the UK's biggest car plant, making the Note, Invitation, Dualis and electric Leaf. It also makes the batteries for the Leaf and three-capacity petrol engines - 1.4, 1.6 and 2-litre. In Europe, most major brands saw sales decline in July.
Opel's registrations were down nearly 19 per cent; Citroen sales fell by 23 per cent; Peugeot was down 21 per cent and Fiat dropped 16 per cent. Market leader, VW Group, had 1.5 per cent fewer registrations while Ford was down 4 per cent. Hyundai sales rose 19 per cent and sister brand Kia was up 53 per cent.
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