Australian Large Car Manufacturer Problems

The last eighteen months have been a difficult struggle for large car manufacturers in Australia. Three of the four prominent car companies have released new products in to the large car segment, in the past eighteen months. Mitsubishi released their Magna replacement, the 380, with huge fanfare. Holden have released their new Commodore replacement – the VE, and Toyota released their dismal selling Avalon replacement, the Aurion.

Due to the long ingestion period of six years or longer the market conditions were very different to the current climate. Back in 2000/2001 there were no real issues with the price of petrol at the pump. The price had hit the $1 mark, but had receded and stabilised around the 80-90 cents per litre mark. These were good times for a large car manufacturer for sales were increasing, alongside initiatives for reduced manufacturing costs. The projected future looked good, and the cars were designed to reflect this.

Mitsubishi were having problems with their Magna through these years. The model was ageing, and the competition had begun to move into newer models. Due to tight budgets, and money being allocated into the development of the 380, updates for the Magna were limited. The French born Olivier Boulay’s facelift of the Magna won no fans, the corporate image didn’t transplant well onto the larger car, similar to Ford’s New Edge design being implemented on the Falcon. Both designed looked good on their smaller Lancer/Mondeo models, but didn’t translate well onto the larger Magna/Falcon.

When the 380 was released, the market didn’t respond as well as Mitsubishi were hoping. Whilst the car was a brilliantly engineered car, they targeted it towards the large car market, a market that was beginning to show signs of slowing. Entering into a slowing market, with cut-throat deals being offered by most companies, consumers have become more savvy with resale values and are more subjective to the looks. The 380 is a little bland looking, and projected residuals were not good.

Holden’s replacement Commodore looks sensational compared to the previous model. No expense was spared (indeed, the $1 Billion vehicle marketing campaigns have let all Australia know), but sales are under projected forecasts. Toyota have weighed into the fray with their Aurion, probably one of Toyota’s best looking vehicles on the market at the moment.

This is the make or break moment for Ford Australia. Their parent company is failing, and won’t make profit until 2009. Ford Australia hasn’t been sitting still either, and has been developing a replacement model for their current Falcon/Fairmont line up. With the current market conditions it would be prudent to Ford Australia to offer a viable engine alternative to the current large 6 cylinder and V8 options.

Whilst current conditions don’t look to favourable for large car manufacturers within Australia, this would be a good chance for the makers to look for viable alternatives such as exporting, or downsizing their operations to more sustainable sizes. Hopefully there will be resurgence within the market or the resultant job losses and economic ramifications will be felt throughout Australia.