The beginning of the end

12 02 2014

If you are an Australian, you will be well aware that we will no longer be making cars in this country within three years.  If you are reading this from somewhere else in the world….. pay attention!

The media here is falling over itself asking why this is happening.  Every darn reason is churned over, and over, and over.  Political points are being scored left right and centre.  It’s their fault….  NO, it’s your fault……  or it’s the high dollar, or it’s the unions, or the lack of tariffs, or maybe they were just building the wrong cars and the Australian market didn’t want those cars……  and our Prime Moronster is taking a hit (which is good..), but really, the two parties that have been in power for the past hundred years or more have little to do with what’s happening here.  The fact they don’t seem to know what is really going on is very worrying.  The lights are on, but nobody’s home……

Holden’s demise was sealed in 2009.  When the financial crisis, triggered by high oil prices, the very same year that saw the US government force GM as a condition of its bail-out to dump the Pontiac brand, for which Holden’s Commodore SS was planned to play a major role, our export car market hit the wall….  Worse, local production of its supposedly fuel efficient (7.4/100km – no bone shaker here) Cruze came too late. So we have peak oil ignorance being all the way to the very end – without any chance for a transition to an EV of sorts…..
Then we have the Conversation publishing an article stating “it’s generally accepted, the car industry is a cr

Matt Mushalik

Matt Mushalik

itical part of Australia’s science and technology base. The sector spends A$600 million a year on R&D and another $800 million on buying inputs from the computing, engineering and consulting industry. So it’s a major producer and user of knowledge.”  Really…?  Where’s the innovation in any Australian car?  My 17 year old Citroen has better suspension technology that any Commodore, and it’s able to produce better fuel efficiency than a Cruze….  Even Toyota’s hybrid Camry is…..  well, just a hybrid!

Personally, I think Matt Mushalik hit the nail on the head with the following charts…..

Holden’s problems started more than 10 years ago
The perfect storm had come much earlier than a high Australian dollar which went above earlier 1990 levels of 75 US cents only after 2007
Underlying graph from:
It was high oil prices which started to exceed permanently the $20 a barrel level in 2002:
That changed the whole car market for good:
Charts which of course leave out the still popular Four Wheel Drive Toorak Tractors……  Somebody must have more money than me, the $100 it costs to fill either of our cars is a significant budgetary impost in this household…
There are eye popping stats in Matt Mushalik’s article….  like the fact 42% of all the cars we exported went to….. Saudi Arabia, the land of the cheapest petrol!
Holden’s research consistently shows that consumers do not value improved fuel efficiency highly. At least in a relative sense, fuel efficiency ranks relatively low when compared to other vehicle attributes such as performance, towing capacity, features and safety. This can be attributed in the main to the relatively low cost of fuel in Australia, and it appears unlikely that this will change in the short to medium term. What it means in practical terms is that if we are required to incorporate new technologies into our vehicles that the consumer does not value, we will obviously not be in a position to recover the cost of those technologies in the price of the vehicles. Ultimately, this will have the effect of rendering our vehicles less competitive in the marketplace” (p 44
And talk of wrong ideas……:

(3.2.1) Holden submission May 2002
Holden made following main points in relation to fuel costs, efficiencies and  commercial production thresholds:
  • In terms of technological change alone, the automotive industry is on the brink of a major shift as we make the transition from internal combustion engines to fuel cells. (p 10)

Fuel Cells?  Well, it was 11 or 12 years ago, but it’s evident today that virtually nobody is still pursuing fuel cells to power cars, most R&D is now in electric vehicles with batteries.

Mushalik concludes with:

The Holden history tells us that wrong decisions were done 10-15 years ago. The 2005 Hirsch report to the US Department of Energy warned it would take 10-20 years to prepare for peak oil. This time has been wasted by Australian governments and the car industry by continuing what was essentially business-as-usual. The unexpected US shale oil boom resulted in global crude production in 2013 getting higher than 2005 but this did not reduce oil prices – although it might have helped to stop oil prices from skyrocketing beyond experience.
If you think that lessons have been learned for other oil-dependent sectors of the economy you’ll be disappointed. The equivalent of the love affair with big cars and 3 litre engines is the continuing push of governments for additional highways, toll-ways and road tunnels instead of electric rail development.
I’m still waiting on the final Australian Oil Production figures for 2013 to be published by BREE to update my yearly posts on our end of oil crisis….  watch this space.  In the meantime, Shell has announced it is totally pulling out of Australia.  Everything.  Service Stations and refineries, the lot.  Now exactly why would they do this…..?