Opinion

It impacts at least a third of all new cars on the road, threatens to cripple the already struggling manufacturing industry and will eventually lead to thousands of job losses across the automotive retail sector because of an anticipated drop in sales. In the Rudd Government's attempt to fill a $1.8 billion black hole the motorist has once again been plundered. Treasurer Chris Bowen says “the world has moved on from when this system was introduced in 1986”. But the changes -- made literally overnight, without consultation -- are so flawed it is difficult to know where to start. Firstly, it will add enormously to the administration of companies big and small, and every person who drives a company car. Rather than assume 20 per cent of a vehicle's use is personal -- and charge FBT on that amount, as was the case -- the Rudd Government is taking a gamble that this figure is too low. Why not simply increase it to, say, 25 per cent across the board and save everyone the paperwork? If the motorist is going to get slugged yet again, the least the government could do is make it easy. Can you imagine the feeling towards the government every time someone fills out their logbook? The suggestion that the work of a logbook can be solved by an iPhone app simply highlights the government's ignorance of the issue. The net result is that companies and their employees will end up paying more for company cars -- which will likely see a shift in the types of cars they buy. Fleet experts are already predicting the government will probably collect less FBT because people will switch to older, cheaper, and privately purchased cars. And be prepared for a glut of ex-fleet cars flooding the used car market as people trade their way out of the FBT nightmare. This is tipped to drive down the value of every car on the road. Perhaps the ultimate flaw, however, is that new FBT rules could suffocate the very industry successive Federal Governments have spent $5.4 billion over the past 10 years trying to protect. Fleet sales account for up to 80 per cent of all locally-made cars. These changes will cruel their business models. For conservative Toyota to come out swinging shows you just how serious a gaffe the Rudd Government has made. The only reason we’ve not heard from outspoken Holden boss Mike Devereux yet is because he is overseas on a work assignment. And Holden is in the middle of sensitive negotiations. But I have a pretty good idea what Holden’s reaction is going to be once it fully assesses this mess. And I reckon you'll be able to hear Devereux's sighs of disbelief from here. This reporter is on Twitter: @JoshuaDowling  

If Holden workers were in any doubt about the seriousness of the dilemma facing the company’s manufacturing operations, there must surely be none now. Australian Manufacturing Workers Union SA secretary John Camillo addressed two shifts of 300 or so employees on the front lawn of Holden’s car assembly line at Elizabeth yesterday afternoon. In his opening remarks Mr Camillo said it wasn’t a media stunt -- as he stood on the back of a rented truck to address the gathered throng. More workers would have been able to attend if the meeting was held inside Holden’s secure complex -- an offer reportedly made by Holden. Stunt or not, Mr Camillo is rightly rallying his troops, keeping them updated and assuring them it is taking action. Unfortunately Holden holds all the cards. Holden wants to bring the annual wages of its factory workers closer to the national manufacturing average of $54,000, rather than the $66,000 average inside the Holden shop. Holden has already stated that it costs $3750 more to make a car in Australia than it does in other General Motors factories. Which begs the question: how on earth does Holden expect to save that much just in worker entitlements and other efficiencies? The reality is that is only part of the equation. Holden is working both angles: it needs to cut its production costs and it also needs an increase in government assistance. If it can achieve both these things, Holden is in with a chance. As of today, Holden is facing three scenarios: * If the Federal Labor government is re-elected and Holden workers find the cost efficiencies and wage cuts that Holden needs, Holden will continue making cars until at least 2022. * If there is a change of government and Holden workers find the cost efficiencies and wage cuts that Holden needs, there is a 50:50 chance Holden will continue making cars until at least 2022 -- because the Federal opposition has consistently said it will cut $500 million from industry assistance (and Holden wants more, not less assistance). * If there is a change of government and Holden workers stand their ground and refuse to take a pay cut and/or find new efficiencies, Holden will probably stop making cars in late 2016, not long after Ford. The workers have until the week of August 9 to vote on their new wages and conditions, Holden has a meeting with the top brass of General Motors in September -- before the next round of upgrades to the factory occur in the summer shutdown. That’s why it is all coming to a head now. Holden is about to make the first of a series of multi-million-dollar investments that are the groundwork for the Cruze and Commodore sedans to be built beyond 2017. Throw the uncertainty of a Federal election into the mix and you can begin to understand why Holden and its workers are feeling uneasy. This reporter is on Twitter: @JoshuaDowling  

Something has happened at Holden in the four weeks since Ford announced it would shut its Australian factories in 2016. This is what Holden boss Mike Devereux said a month ago: “Despite Ford's announcement to end local manufacturing we believe the industry can survive in Australia and has already adjusted in large part given Ford's relatively low production volumes.” Devereux went on to reaffirm Holden’s 10-year manufacturing plan that would see Holden “inject $1 billion in this country and secure production of two all-new global vehicles all the way out to 2022”. But last week Holden sounded like it might shut its local factories at the same time as Ford. “If we don't accomplish it is highly likely we will not make cars in this country. We have to reduce the cost to make each car, which is too high in this country. If we keep losing money making cars, we won't be able to make cars here anymore. The cost base is too high, it is unsustainable, it has to be reduced.” Devereux went on to explain it costs Holden $3750 more to make a car in Australia than it does in other General Motors factories. When announcing its financial loss of $152 million for 2012 last month Holden admitted it makes a loss on locally-built cars and only makes a profit from imported models. General Motors makes the Cruze small car in nine other factories around the world, one of which is in Thailand, which has a free trade agreement with Australia. It’s not too hard to figure out Holden could import the Cruze into Australia from Thailand and actually make a profit rather than build it here at a substantial loss. It is therefore hard to figure out why, against the odds, Holden is fighting so hard to keep its loss-making factories. If you level out the peaks and troughs over the past 12 years Holden has made an average annual profit of just $28 million from an average annual turnover of a massive $5.5 billion. And that’s after receiving $1.8 billion in taxpayer assistance over the same 12-year period. The car business is brutally pragmatic when it needs to be: history and compassion take a back seat to economic realities. In North America, Detroit’s big three car makers shut factories at the stroke of a pen (or, in these modern times, with the delivery of an email confirmation). Holden nobly says it is fighting to save its car assembly line in Elizabeth and engine factory in Port Melbourne because it believes Australia should maintain its “hi-tech” manufacturing capability. Holden also says it is also concerned about the likely social destruction if 1700 jobs were wiped out at Holden’s vehicle operations, and the knock-on effect on the supplier industry -- and what would become the sole remaining car maker: Toyota. It is widely believed if Holden goes Toyota would likely follow. For its part, Toyota publicly and steadfastly insists it is “committed to building cars in Australia”. But Toyota insiders tell a different story, revealing to News Limited that Toyota has been doing cost estimates on shutting its Australian factories for the past five years. Toyota posted a $149.1 million profit in its latest financial reporting period but insiders say it lost more than $400 million on locally-made cars. Early last week Devereux said Holden would not be able to survive without Toyota (because parts suppliers need the scale and output of Toyota and Holden to remain viable). Last Friday Devereux inched one critical step further: “ is viable with two of us, I don’t think it’s viable with one of us.” Devereux is being uncharacteristically open about the plight of the industry (Ford gave not a single clue until the morning of its factory closure announcement) because he wants to know if Australian taxpayers are prepared to pay to help keep it alive. In the process Devereux wants to educate the public and politicians. If possible Prime Minister Tony Abbott thinks exports are the answer (as he has repeatedly stated) the industry really is in trouble. At current exchange rates Toyota loses about $2500 on every Camry it ships. One of the key points lost in the hype is how Australia has kicked an own goal by reducing tariffs while other countries have not -- and establishing free trade agreements with countries that then create hidden, non-tariff barriers such as tax audits of buyers of foreign cars and higher insurance premiums. The high Australian dollar has only magnified the problems and accelerated the local industry’s decline. As evidenced by Holden’s financial figures it would be easier -- and more profitable -- for General Motors to shut Holden’s factories and turn its back on the employees that pulled it through the Global Financial Crisis by working one week on and one week off, among other sacrifices. Which is why it’s laughable some politicians believe this is all a bluff. Why would Holden risk damaging its brand image and the launch of the new Commodore for some perceived leverage? In fact, Holden’s brand image is one of the key reasons it is fighting so hard to keep its local factories alive. Holden believes its reputation is inextricably linked to manufacturing and a shutdown of its factories would spark a sales slump of its imported line-up. I beg to differ. Switching purely to imported models would barely leave a dent on Holden’s sales. Most Holdens sold in Australia already come from Thailand or South Korea as rebadged Chevrolets. There is one more worrying element to all of this. Holden gave its factory workers until the middle of August to come back with a plan to cut costs -- but even then that is no guarantee it will be enough to keep the factory running in the medium to long term. When asked at a business lunch last Friday if Holden manufacturing operations would survive if factory workers did indeed swallow a pay cut and find new efficiencies Devereux said “wages are just one part of the equation”. When asked if he had a gut feel for how this whole ordeal would play out Devereux said: “I honestly don’t know”. At least we know a locally-made SUV has been ruled out (contrary to suggestions by some union officials). Although there are more than 80 SUVs on sale in Australia, none are top-10 sellers. And Holden must have two top-10 contenders because it must rely on local sales to maintain factory throughput (because exports are unviable, especially when a South Korean factory can bang out a Captiva SUV for thousands less than Australia). When asked if he had received a warning from General Motors head office in Detroit -- to wind-up the local factory in the wake of Ford’s announcement -- Devereux insisted he had not. That only leaves one option for the change in Holden’s tune over the past four weeks. Perhaps Holden has finally put more weight in preliminary polling which shows the federal opposition is likely to be elected into government on September 14. The Gillard Labor government is a strong supporter of the car industry but the Coalition has said for the past year it will pull $500 million from industry assistance by 2015. But Holden doesn’t have that long to wait. Its first multi-million-dollar investment in the early groundwork for its new-generation cars are scheduled to happen between now and June 2014, according to federal budget documents. Holden doesn't want to spend that first instalment -- estimated to be more than $150 million -- if it's not going to need the factory upgrades after 2016. This reporter is on Twitter: @JoshuaDowling  

Perhaps now the Opposition will realise Holden is not "bluffing'' about its threat to shut its manufacturing operations in Australia. The car maker yesterday approached its factory workers and the union that represents them to negotiate ways to reduce labour costs. That's corporate speak for "take a pay cut''. And just for good measure, like a car salesman closing a deal, Holden wants to know the answer by August - before the election. No doubt many Holden workers will rally and support each other. After all, they don't need to look too far to see the fate of their counterparts at Ford, which announced it would close its factories in 2016. But other Holden workers will also be exhausted from the rhetoric, and will be questioning what they're fighting for. These are the same workers who were rostered one week on and one week off to help Holden through the global financial crisis. These are the same workers who have switched to a reduced number of shifts to suit Holden's revised production plans. Now Holden is asking them and their families to take more financial pain - even though the top brass at Holden have refused to take a pay cut. This reporter is on twitter: @JoshuaDowling  

I hate it when I get a phone call or an email from a Volkswagen owner experiencing reliability problems with their car. That's because I somehow feel partly responsible for not warning them more loudly or more often about the hidden heartache in owning a Volkswagen. As a World Car of the Year judge I've voted for the past three Volkswagen winners over the past four years -- because the cars are superb to drive and a well executed design. What's becoming increasingly apparent, however, is that Volkswagen cars are not as superbly made. I took a phone call on radio just last night from a Sydney VW owner who has been experiencing problems with her car for years and is out of pocket as a result. She was blissfully unaware of the drama that's been brewing in Melbourne. I felt genuinely helpless, much like the VW owners themselves I expect. Volkswagen's long standing reliability issues returned to the spotlight in the past fortnight after a coroner's inquest into a fatal crash involving a Volkswagen Golf that appeared to slow suddenly. It was hit by a truck from behind on a Melbourne freeway in 2011. The driver of the Golf died. The findings are due next month. The coroner's inquest prompted phone calls and emails from VW customers who reported a wide range of mechanical issues including engines conking out and gearboxes that can hesitate between gears, slowing the car in potentially hazardous situations. Other customers complain of engines that idle rough or use too much oil. The overwhelming feedback, however, is that Volkswagen Australia, in the customer's view, doesn't appear to take the issues seriously enough. Indeed some dealers have become so exasperated by VW's lack of response they have begged customers to take up their concerns with head office. But it appears VW Australia, too, is being hung out to dry by its head office in Wolfsburg. News Limited understands that the German car maker is refusing to issue a recall locally for the wide ranging issues affecting cars here. This is despite the fact VW has recalled vehicles for similar mechanical defects in North America, China, Singapore and Malaysia. Instead, VW Australia will fix 4000 selected models as part of a "service campaign" and has invited concerned customers to bring their cars in for a check up. It has instructed dealers to put more loan cars on their fleets to cope with the increase in demand. (This follows a service campaign for 8700 cars in 2010 for engines that idled rough or "shuddered".) But VW's action today is almost too little too late. VW has allowed this issue to drag on for too long. Years too long. The Carsguide website has VW customer concerns dating back years and the number of complaints has only been increasing. That's why I believe there is a very real risk that this latest debacle will put a dent in future VW sales. Clearly the events over the past fortnight have already put a dent on consumer confidence in the brand. VW has had phenomenal growth in Australia over the past decade. Last year its Golf hatchback even outsold the Holden Commodore on one particular month. But the number of buyers who have since expressed regret about buying a Volkswagen is astounding. Australians take Japanese reliability for granted because about half of all new cars sold here are made in Japan. But the reality is Japanese cars routinely top quality surveys around the world. It's not the norm, it's the benchmark. When we visit the factories of European car makers it's not uncommon to see Japanese cars stripped to pieces in the back corners as they learn how to make theirs better. Over the past 10 years more and more Australians have been treating themselves to a European car expecting better reliability, but many have been dumbfounded and disappointed to find the opposite is true. My motoring media colleagues and I see it every day. A friend, a family member or someone in the office wants to buy a VW or another posh brand. Most of us warn them about the feedback we regularly receive about iffy reliability and high service costs. But few of us can change their minds. So if you're asking me if you should buy a Volkswagen, here is my standard answer (which it has been for some time now). Try to sell it before the three-year factory warranty period expires -- and budget on a few days of inconvenience each year until then as you're likely to be taking the car in for unplanned maintenance. If you still want to buy a new VW after that advice, you have my blessings. They're great to drive. But I wouldn't buy a secondhand one without having a mechanic you know and trust go over it. And reading the countless blogs of disgruntled owners. As for the caller last night and her troublesome Volkswagen, I can only hope she is among the 4000 customers VW is going to contact in its latest service actions. Meantime, don't hold your breath for any of our consumer groups or  government authorities to act. We have the weakest lemon laws in the developed world. Perhaps that's why VW recalls have been issued overseas and not here. This reporter is on Twitter: @JoshuaDowling  

Holden's second-biggest financial loss on record -- $152.8 million -- makes for grim reading, but it’s not the end of the road for the car maker. The company would have made a modest profit if not for the $198 million writedown of its Elizabeth car-manufacturing facility, which is now worth less as an asset because of its reduced production output, and $27.8 million in redundancy payments. Yesterday’s admission that Holden does not make money on locally-made vehicles may also startle some observers. “The losses we have talked about today are a direct result of Holden building cars in Australia,” it said bluntly. But it does make money on imports. Holden is particularly exposed to the tough trade conditions driven by the strong Australian dollar -- imports are cheap, export opportunities are limited -- because 60 per cent of its volume comes from cars made locally. But rest assured Holden is taking the tough but necessary steps -- including the latest round of redundancies, which has been extended -- to match its factory output with demand so that manufacturing is sustainable beyond 2016. That year will mark the end of on era and the beginning of another for Holden, when the Cruze small car will be built alongside a global four-cylinder front-drive sedan that Holden says (for now, at least) will be called a Commodore. Contrary to what you might expect, Holden described the gloomy results as “a world class balance sheet” and “a position that many companies across the world aspire to, but few achieve”. I don’t have the business acumen to assess the accuracy of those comments, but Holden does have “zero debt, strong cash reserves … and a very healthy pension fund”. The company claims it is now “well-positioned for future profitability”. Which partly explains why Holden isn’t panicking. Car makers have much longer-term vision than the public, or governments for that matter. They look at the future in 10- and 20-year lots, and economic conditions change a lot in that time. We will still have parity with the US dollar in 2022? Who knows? The reality is that Holden wouldn’t be here if it didn’t see a manufacturing future in Australia. How many other companies or industries would tolerate a profit of just $64 million from a turnover of $5.5 billion, Holden’s average financial performance over the past 13 years? If anything, the financial result shows just how determined Holden is to keep manufacturing in Australia. It would be a lot easier -- and a lot more profitable -- to lock the factory gates and walk away. The question is: does the rest of the country believe in it?

Information is good, but domination is bad. So I like big digital speedometers, blind-spot warning systems and reversing cameras, but I'm against automatic parking, radar cruise controls and anything which can influence the steering. My personal jury is still out on automatic emergency braking, but I think it's probably going to get a tick. The reason for this reluctance runs all the way back to the very first cars I drove with anti-skid braking systems, a BMW 5 Series and a Honda Accord. I can clearly remember the wheels of the Accord chattering and skidding as I tried a panic stop, but the Five was worse. I was driving on a gravel road when I needed to brake for a corner. I did, but the car did not, and I can clearly picture to this day the tree I narrowly missed as I arrowed off the road with the ABS system working - or not - precisely as the engineers intended. Hitting the personal fast-forward button, there was a Lexus that insisted on applying emergency braking power when another driver cut into my lane and cut the beam for the over-sensitive radar cruise control, a Camry that cut engine power just when I needed it in a corner, and a Volkswagen that refused to accelerate from a Stop sign because I was holding the car on the brake at the same time as tickling the throttle. Just last year, there was a Mercedes-Benz that swerved me into the path of an oncoming car when it detected that I had drifted over the white line, when in fact I was easing gently away from a potential head-on smash. I know that technology improves and I like some of the stuff that makes life easier, but I was overwhelmed this week by the all-new Volkswagen Golf and a bank of safety equipment that runs from a fatigue monitor to radar cruise control, automatic wipers and lights, automatic parking and even multi-collision braking to stop the car after a crash. A lot of this stuff is good, and there's no doubt that it should make our roads safer. But it's also encouraging a breed of drivers who are really just passengers, relying on their cars to save them from themselves. And that cannot be good. This reporter is on Twitter @paulwardgover  

I didn't have to drive to a Bob Jane T-Mart to get the answer, just talked to a couple of car company chiefs. The actual price varies a bit, but they say it comes in somewhere between one star and 40 litres. How's that? Well, a full-sized spare can help a new car achieve a five-star safety rating but it can also gobble up as much as 40 litres of boot space. But, for buyers, the luggage loss can be offset by a very marginal improvement in fuel economy. I learn these surprising facts from Nick Senior, chief of Subaru Australia, as I test drive his ripping new Forester. It will be the Japanese brand's favourite car this year, and for years to come, taking over from the smaller but trendier XV in a reflection with our collective obsession with SUVs. Subaru buyers demand full-sized spares and that's what they get in the Forester, just like the BRZ sports car and all the rest. Toyota has ripped the spare out of its 86er twin - a decision about to be reversed for Australia - but there are plenty of reasons why companies do it. It saves them money, primarily. But it also means they have more space in the back end, which is important in baby cars and haulers which need maximum baggage capacity. A space-saver, or no spare at all, can also mean a 25 kilogram weight saving and that has a direct impact on economy. But there is a bonus in staying full-sized."A full-sized spare can help with rear crash protection," says Senior. "It's also a priority for a lot of people in Australia. They drive a long way and they want security." The full-sized spare debate has raged for years, fuelled by Holden's decision to make one an option in the VE Commodore and BMW's move to rough-rider runflat tyres across much of its range. It's true that flats are much less common today than they were in the past - I only had two in 2012 despite driving 150-plus cars over more than 100,000 kilometers - but you still have to wonder. I know I took an instant dislike to the Volvo S60 when I discovered there was no spare at all in the car, and I was dismayed to discover the cramped boot in the Subaru XV. The new Forester is better, but 40 litres is still a lot of space to sacrifice because the Japanese designers didn't think about Australian roads and owners when they were designing the car.  

It might have been in the city, at a shopping centre or at the airport when picking up or dropping off loved ones? If paying inflated petrol prices wasn’t enough, motorists are now also being hit with inflated parking rates when they go shopping or to the airport. Then, of course, there are the CBD parking stations that cost an arm and a leg. It’s these CBD parking stations that consistently cost motorists dearly as the fees at the CBD parking stations start climbing the moment that boom gate rises to let you in.  Of course the apologists for the CBD parking stations will rush to their defence and say that the exorbitant CBD parking station fees are the fault of higher land values in the CBD and city councils that impose parking levies on the parking station operators. And, naturally, the free market theorists will say tough luck as it’s “the market” that decides the price. Well, the problem with all those excuses is that there’s a real market failure when it comes to CBD parking station fees. Quite simply, there’s a lack of full and timely transparency of the CBD parking stations fees.  How many times have you driven past a CBD parking station only to see advertising boards offering an attractive “from” price? Rarely, do you see a full price board until you are sitting right in front of the boom gate with some impatient driver behind you honking their car horn for you to quickly go through. Why don’t the CBD parking stations put their full price board in large print at a highly visible place where motorists have an opportunity not to enter the parking station if they don’t like the advertised prices?  It’s pretty simple. CBD parking station operators don’t want you being able to shop around and that’s what you could do if you see the full price board from the road. The harsh reality is that the operators don’t mind ambushing you with the exorbitant prices at the boom gate as you then have no choice but to accept the parking fees given it’s impractical or just dangerous to try and back out onto the road with cars behind you or that could come in behind you anytime.  As for the price boards indicating an attractive “from” price there’s certainly a good argument to be made that they are misleading motorists by creating a false impression as to the true cost of parking at the particular parking station.  And, of course, parking station operators should not feel protected by some tiny asterisk next to the attractive “from” price as the tiny fine print linked to the asterisk cannot generally be seen or read from a motor vehicle. The key message is that the onus is on parking station operators not to mislead motorists. Here our friends at the ACCC could certainly take action to deal with the misleading conduct. They could also have some useful input regarding the development of a mandatory code of conduct for full and timely transparency of parking station fees.  These initiatives would obviously help motorists, but more needs to be done as it’s not only motorists that suffer from inflated parking rates. Whether it’s at a Westfield Shopping Centre or a major airport inflated parking rates hurt retailers at those locations by penalising customers who spend more time shopping at the particular location.  It defies logic that the longer customers stay to shop and spend money at the shopping centre or airport, the more they pay for parking. Where’s business sense in that? Or is it simply a case of what the shopping centre can get away with? Read full story on The Punch

Loading and unloading the toddler into and out of a variety of cars, from a $19,990 scoot-about coupe to a $250,000 laze-about limo, teaches a lot about design and comfort and even window tinting and aircon outlets. These little things become just as important as ride comfort and cornering grip when you're trying not to unsettle a youngster who has just started dozing for the first time in the day. One jerky downshift, or a rocking-rolling response to the brakes, can easily undo all the good work. I can now see why so many mums want a compact SUV in the driveway, as the latest Subaru Outback ticks almost all the family boxes. The Japanese company's first diesel engine is never going to rival a Volkswagen, and is lacklustre at low revs, but the rest of the package is ideal when you have prams and change bags and swimming gear and more to lug about - as well as a back-seat entertainment package that runs from a custom carseat to hanging toys, mirrors, books, soft toys and more. My Eli testing over the past fortnight also reveals that a Mercedes S-Class is not as big as I think once the youngster and all his gear is on board, and that it is just about impossible to get a chunky chappie into a carseat in the back of a Kia Koup without a few tears and tangles. The Benz is nice, but the Outback is better for family use and I would actually prefer the latest Jaguar XJ if I was buying a car for my garage. But that's another story. The break also allowed me some driving time with my own car, and personal motoring touchstone. It's a 1980s Subaru Brumby ute which has seen better days and is slowly falling to the creeping touch of car cancer. The rust is not critical yet, but I have to make a decision soon before the faithful workhorse becomes critical. For people who don't know, or cannot remember, the Brumby is a baby ute that was a hero for Subaru in the days before the Impreza WRX became a worldwide icon and the company transformed into an SUV powerhouse with the Forester and Outback. The Forester is slow, basic and huge fun. It has a four-speed gearbox, a wheezy 1.8-litre engine, so-so brakes and - despite some Pedders tweaking - suspension which will never even rival today's Hyundai Getz. So why do I love it? Because it needs to be driven, and it reminds me of all the good things in modern cars. Any quick-start 2010 car is a dream compared to an ancient Subaru that usually needs a jump-start assist after sitting for a couple of months, as well as plenty of warming before it tackles any hillls. The Brumby is nothing special to drive and that's what makes it special. It reminds me every time of the days when I began driving and also serves as a brilliant benchmark of the progress over the past 25 years. Follow Paul Gover on Twitter!