Aussie car industry needs cleaning up, not bailing out
The Australian Government has been bailing out automotive manufacturers since 1985. Both that year’s Button Plan and the 2008 Bracks Report recommended restructure and additional funding. But unless the Australian industry accepts the reality of today’s automotive market, bailouts will make little difference and we’ll continue to see closures and job losses.
The global market shift to low-emitting, fuel-efficient vehicles is going to make it difficult for the local car industry – which produces predominantly large, high-emitting vehicles – to compete internationally. Not surprisingly, the Middle East is currently Australia’s main export market, given its demand for large vehicles (but we face growing competition there from the US). Emission standards mean Europe and parts of Asia no longer want our cars.
Declining global exports mean the Australian car industry is dependent on sales to the government and business sector for its future. In 2007, nearly 56 per cent of Australian-made vehicles were sold to the business sector, and 19 per cent to all tiers of government. With the lowering of tariffs and rising oil prices, consumer preference has shifted to either small fuel efficient vehicles or from the large passenger vehicles to sports utility vehicles. In effect, sales of Australian-made vehicles fell from 85 per cent in 1986 to 14.1 per cent in 2010.
So you might think it’s a positive that government is proposing to mandate vehicle CO2 emission standards for all new light vehicles from 2015. According to the government, these standards will “represent the single most important measure with the potential to deliver the largest reductions in transport emissions.” Surely lower-emitting vehicles will mean better sales overseas and at home.
The emission standards will apply to all new vehicles sold in the country. Effectively this will discourage new car importers dumping their high emitting vehicles into Australia, and reduce the uptake and popularity of high-emitting SUVs.
But if the Australian government comes to the aid of the local car industry, it is likely these standards will be deferred, compromised or both.
The National Transport Commission (NTC) reported that in 2010, Australian-made vehicles had higher emissions than the country’s emission standards. They averaged 247 g/km compared to the nation’s average of 212 g/km. It is questionable whether the industry can significantly reduce its emissions; on average, Australian-made vehicles reduced their emissions by only 4.7 per cent from 2009.
Submissions to the government’s paper closed in December 2011. The Australian Conservation Foundation proposed that the mandatory emission targets ought to be similar to the EU’s: 130g of CO2/km by 2015 and 95g of CO2/km by 2020. The Federal Chamber of Automotive Industries proposed lenient targets of 195g of CO2 in 2015 and 176g of CO2 in 2020. In 2010, the EU achieved emission standards of 146 g/km: 44 per cent less than Australia’s average emissions.
The Australian Government will most likely have to adopt lenient targets if it bails out the local car industry. But it is not as if the local car industry was caught unaware that it had to improve its vehicles' fuel efficiency and reduce emissions.
For instance, two sets of voluntary fuel efficiency target were set in 1978 and in 1987. At the time, both targets failed because consumers' preference was for bigger cars.
In 2003 a third target was set at 6.8L/100 kilometres by 2010. Holden and Ford failed to make significant cuts to CO2 emissions. The NTC reported that in Jan-Aug 2009, Holden had the highest average emissions – 279 g/km – with virtually no improvements since 2005. In 2010 the NTC reported that Holden had improved its average emissions to 260 g/km, still well above the country average of 212 g/km and above average emissions from Australian-made cars (247 g/km).
It is unlikely that Holden would be able to meet the EU mandatory targets; it makes sense that they would be arguing for lenient targets. The Australian Government will be pressured to set lenient mandatory emission targets if it is proposing $100 million aid to Holden and $35 million aid to Ford.
Simply throwing money at the local car industry will not necessarily increase sales and save jobs. Funding should not be supported if the local car industry fails to make the necessary technological changes to significantly reduce emissions of its large vehicles to meet the government’s proposed targets. The industry must also introduce new fuel-efficient vehicles that consumers would rather buy.
Without these changes, the industry will no longer be sustainable: government and business fleet buyers will be reluctant to buy and support Australian-made vehicles that fail to satisfy the mandatory CO2 emission standards.
Mandatory emission standards should not be comprised in order to save the local car industry. Lenient mandatory emission standards will allow the continuation of high-emitting vehicles being imported and sold in the country and Australia will fail to reduce its road transport emissions.
Anna Mortimore is a lecturer at Griffith Business School, Griffith University
This article was originally published on The Conversation – theconversation.edu.au. Reproduced with permission.
Comments on this article
Unfortunately this is the
Unfortunately this is the cruel reality of today. I also read the trend in buying used cars is rising. People are changing their habits and the auto-industry had better get ready for it. I for instance I am trying to figure out how to how to donate a car. I've come to realize that living in a crowded city and owning a car is not a fit...
Renewable fuel can be used in CNG cars
BluePlanet, you are now being deliberately deceptive, writing: "Are you saying that because methane is renewable that natural gas is a bio-fuel? This seems to be the implication of your argument."
Clearly I made NO SUCH IMPLICATION.
A car that can be fueled with non-renewable natural gas can be fueled by renewable bio-methane.
Is that plain enough?
You also state: "I'm not sure there's commercially available bio methane."
You seem to be implying that if people buy CNG-fueled cars, bio-methane will not be made commercially available, thus preventing them using a renewable fuel in these cars.
Australia's car industry
Unbelievable that in 2012, with all our knowledge about climate change, the coming food shortage and need to change to plant based diets and so on, we still produce even small cars mainly for one passenger to do multiple short trips.
Get real. Stop bailing out inefficient outdated industries. Start producing electric bicycles, tricycles and ordinary bicycles. Imagine Melbourne with 500,000 fewer cars and 1,000,000 more bicycles. Oh Bliss!
Think of the future and go there now. No in betweens.
Such thinking of leading or
Such thinking of leading or at least being in the leaders of vehicles with small emmissions whether big or small is beyond our leaders when handing out moneys .
Such thinking of leading or
Such thinking of leading or at least being in the leaders of vehicles with small emmissions whether big or small is beyond our leaders when handing out moneys .
Bio fuel
Are you saying that because methane is renewable that natural gas is a bio-fuel? This seems to be the implication of your argument. Methane from land fill etc can be harvested but bio ethanol is distilled specifically as a bio fuel and is commercially available. I'm not sure there's commercially available bio methane. Natural gas is not distilled but mined from natural gas wells, shale or coal seams. Natural gas while mailnly methane is not bio methane. Holden produces vehicles that can operate on bio fuels.
Bio-Fuels: A Footnote
Natural Gas is predominantly methane.
Landfill gas and bio-gas are predominantly methane and are renewable.
Ethanol is produced by aerobic fermentation of sugars.The same sugars are converted into bio-methane by anaerobic digestion.
Saving the Australian Car Industry
I think you're quoting figures for LNG and not CNG.
There's a big difference. My calorific values are correct. They are expressed in terms of volume as you can see. To convert into GGE (Gasonline Gallon Equivalent) a standard used in the US, Petrol has a GGE of 1.0, LPG has a GGE of 1.35 that is to say less than Petrol and CNG has a GGE of 3.82. LNG has a GGE of 1.53 which is close to LPG. But you can't buy LNG at the bowser yet.
wikipedia.org/wiki/Gasoline_gallon_equivalent#cite_note-about-3
As for the commodore's fuel capacity, I checked the holden website and it states it is 71l not 59l giving a range of almost 800kms.holden.com.au/vehicles/sportwagon/omega/specifications
I stand by my assertion that the cars you refered to are small, the touran is a version of a golf. These should be compared against the holden cruze which also seat 5.
My point is that many consumers purchasing larger imports and SUVs would be just as well of with a sportwagon if they wanted the extra space and cargo capacity flexibility. Why is it that we see so many of these vehicles on the road? I believe we have to concede that not all consumers are going to squeeze into a small fou for all their needs all of the time.
Read todays, fracking up the climate debate regarding your assertion of the rise in fuel prices.
Saving the Australian Car Industry
To repeat Anna Mortimer's observation: "The global market shift to low-emitting, fuel-efficient vehicles is going to make it difficult for the local car industry..."
Blue Planet's emotive and misguided comment that in proposing CNG vehicle manufacture "I would Australia trash its car industry in favour of a foreign manufacturer" shows further bias. I proposed that the more advanced vehicle makers be encouraged to buy out the current failing Australian car industry operators.
The US car industry lost ground to more-efficient Japanese cars because it failed to produce what car buyers wanted.
A Commodore with a 59L petrol fuel tank costs about $90 to re-fill. A CNG Zafira Tourer costs only $25 to re-fill its 25 kg CNG fuel tank.
Oil prices are heading up. Natural gas prices are heading down. Natural gas vehicle sales are growing by over 24% per year. The local car industry is making cars for a dwindling market.
Keep building cars that are getting progressively more expensive to operate, and the local car industry will have trashed itself.
CNG vs. Petrol (US Environment Protection Agency):
Devil in the detail.
I'm late to this topic but is the EU a good role model for emission standards? My understanding is that, under pressure from Germany, the rule is inerpreted as 130g CO2/km across a car manufacturers entire range.
That way VW, for instance, can sell as many Porsches, Bugattis and Benleys as it can just as long as it also sells lots of Polos and Golfs and small Skodas to get it's range average down. Yes the standard is met but more cars are putting more CO2 intoto into the air. Benz, BMW, or anyone can do the same trick - lots of high emission cars balanced out by even more smaller cars.
Re pouring cold water on CNG
If you look at the following reference you'll see that even Germany has a long way to go before it becomes a significant CNG player. Yet you would have Australia trash its car industry in favour of a foreign manufacturer that doesn't have a large following for this technology in its home country. In addition there just aren't that many CNG refuelling stations in Australia yet. There's only one in the ACT. My point is that the vehicles being produced by Australian manufactureers are fit for purpose now. Even bio ethanol is not commonly available but if it isn't you can fill up with regular fuel. And bio fuels are renewable. Even Qantas is looking at bio fuels for use in its aircraft not just on the ground. Another interesting development is the mannufacture of bio diesel in Tasmania from waste products. The cruze has a diesel motor which would be compatible with bio diesel.
http://www.iangv.org/tools-resources/statistics.html
Re Inaccurate and Bias? propane and butane
Neither propane nor butane are regarded as greenhouse gases. If you can point me to a reference to substantiate your claim please do so. A common reference for greenhouse gases is here http://en.wikipedia.org/wiki/Greenhouse_gas#Atmospheric_lifetime I believe what you have mixed up is the combustion products of methane, propane and butane. This should not be confused with the gas in it's natural form. This is why fugutive emmissions from shale gas and coal seam gas are so important. Coal seam gas is not nearly as bad it seems as shale gas. But you still get fugitive emmisions. This can undo a lot of the benefits of using the gas as a fuel, as the fuel itself does burn fairly cleanly compared to other fossil fuels suchas petrol. But as I have said previously the commodore will run on 85% ethanol, a bio alternative, which is a point you have not taken up.
Blue Planet - Inaccurate and Bias?
You're pouring of cold water on CNG-fueled vehicles seems a little biased. A number of statements are inaccurate.
First you claimed
"Compressed natural gas has a lower calorific value than either petrol or LPG....with CNG... You'd just have to fill up more often."
NB:
Natural gas: 53.6 MJ/kg,
LPG = 50 MJ/kg,
Petrol 46.5 MJ/kg
Now you claim:
"1. only 520kms in CNG mode alone
2. Both vehicles are also small four cylinders.
3. LPG, propane/butane, is safer because it's not a greenhouse gas/es
4. current commodore is one of the most fuel efficient cars on the market today.
5. the fugitive emissions [from CNG] would outweigh the benefits
6. Commodore sportswagon V6 8.9l/100km"
Note:
1. The Commodore V6 has a 59L fuel tank. (About $90 to fill). At 8.9l/100km, its range is 660 km.
2. The German CNG vehicles are NOT small 4-cylinder vehicles. They seat 5-7 people, the engines produce 110KW, and have a 200 km/hr top speed.
3. Propane and butane are both powerful green-house gases.
4. The German CNG vehicles are by far more fuel efficient than the current commodore
5. Nitrogen oxides produced by burning petrol is a green-house gas and causes smog. CNG eliminates this pollutant.
6. At 8.9l/100km, the Commodore sportswagon V6 costs about $13.50 per 100km in fuel. The CNG vehicles cost about $4.60 per 100km in fuel.
Touran TSI
http://www.automobilesreview.com/auto-news/vw-touran-tsi-ecofuel-improve...
In natural gas mode, the increased fuel tank will have a range of approximately 520 kilometres and the 11-litre petrol reserve tank will add an extra 150 kilometres.
So, only 520kms in CNG mode alone. Both vehicles are also small four cylinders. These should be compared against vehicles in the same class. The figures I have quoted for consumption are australian ADR.
Re higher fuel taxes
Commodore sportswagon V6 8.9l/100km
Honda CRV 10l
Volkswagen Passat Higline V6 FSI 9.5l
You probably want to check all your figures before making such claims. The current commodore is one of the most fuel efficient cars on the market today. And it runs on bio-ethanol. While running on CNG might also be good it's still a fossil fuel and every time you fill up you might get some fugitive emmissions. As methane is at least 25 times as bad as CO2 as a greenhouse gas is this what we want? It might be fine in a bus but running millions of cars on it probably won't help that much overall as the fugitive emmissions would outweigh the benefits. However, LPG, propane/butane, is safer because it's not a greenhouse gas/es. If you're trying to be environmentally friendly you should be factoring this in.
We need higher fuel taxes; own a small car and hire big one
Good article. I agree that government dpeartments and corporations are the worst offenders in buying fuel inefficient Australian vehicles and flooding the second hand market with them. Best start with Govt having to buy fuel efficient hybrids or small cars - mandate strict fuel standards here; also fo taxis - stop them buying horribly thirsty Falcons and Commodores.
Why not eoncourage say VW to buy one of the exisitng plants and retool it so it only produced a fuel efficeint 5 seater? Corolla, Golf, even Polos are 5 seaters and adequate for a family; I had 2 teenage girls and we got around in a Suzuki Swift!
Loved the idea of more, cheaper car hire places. It's already cheaper to hire a big car only when you need it. We (2 of us) find the Charade fine. But I have hired a 'big' Corolla for $25/ day and an Outlander 4wd for 450/ day; only used them for a couple of days. Trend should be 'own a small car and hire a bigger one.'
And petrol excise needs to double to where it is in Europe - that would have a much bigger impact than fuel standards, though the latter will help.
Ben Rose, Convenor Sustainable Transport Coalitionof WA.
Reply Blue Planet - Fill Up More Often? No Need. NoThanks
"Compressed natural gas has a lower calorific value than either petrol or LPG."
Does it matter where it counts? No...
The cost of CNG is equivalent to petrol at about $0.60 per litre. Petrol and diesel prices are headed upwards. Global natural gas prices have been falling for 5 years.
"The global market shift to low-emitting, fuel-efficient vehicles is going to make it difficult for the local car industry..."
How dumb can an industry be - when Blind Freddy can see where the global market is going.
Re global car industry and road freight industry
Compressed natural gas has a lower calorific value than either petrol or LPG. Calorific value of CNG, methane, 38 MJ/m3 equivalent to 10.6 kWh/m3 versus 94 MJ/m3 equivalent to 26.1kWh/m³ for LPG. CNG is used commonly in NZ. A lower calorific value means you have to use more gas to go the same distance or fill up more often. There's nothing wrong with LPG, primarily propane. Holden make LPG powered commodores. But if you have to have CNG it isn't too hard to convert an LPG to a CNG. You'd just have to fill up more often.
Reply to Blue Planet
The global car industry and road freight industry is introducing natural-gas vehicles (cars, buses, trucks).
Fuel is about $0.60 per petrol-litre-equivalent. Emissions are slashed. Large car sizes are available. Long range between re-fuelings is available. eg: Opel CNG Zafira Tourer, CNG VW Touran TSI EcoFuel.
Govt support should go to Volkswagen and Opel on condition they buy out the Australian car industry and use their successful vehicle engineering and marketing.
Re decent mid size
I don't believe it is a subtitute for a family wagon, either imported or locally made. It has a range of 110kms, highway use, which wouldn't get you to the snow from Sydney and a recharge time of eight hours. An at home charging station is an extra $2K. Average price outside the US is around $50K. Cargo capacity 410 litres vs 895 litres for a commodore sportswagon and a sportswagon is not big. Commodore will run on 85% ethanol though. http://en.wikipedia.org/wiki/Nissan_Leaf
Clean up with financial assistance
I believe with financial assistance and the use of new technologies, our car industry will prosper, but also many people can't afford a new car so bringing the cost down, lowering the cost of living will help our automotive industries future.
Nissan Leaf is a decent mid sized family car 5 door
You can see it on this youtube film. Available off the shelf this year.
http://www.youtube.com/watch?v=j0sCCJFkEbE
and for those who want a car that keeps on driving beyond 170km without needing a charge then GM/Holden Volt - first 60km electric (the vast majority of trips) and then petrol/electri for anything beyond 60km.
Likewise Toyota has the Plug-in Hybrid Prius on the way.
Re Is the Australian Car Industry Stupid?
Holden produced the cruze and sidi commodore in response to such demand. Please refer to my other post. Both of these vehicles are fuel efficient for their market segment. As people have said about EVs, you're not going to squeeze an Aussie family into a 3dr hatch easily. Perhaps the right approach for policy is to look at a family's requirements and charge taxes accordingly. If your average family of four/five owns a single commodore it is going to use fewer resources than a couple without children running two golf gtis. This is most likely the reality of the situation. Families that settle on a single vehicle will be penalised when they have in fact made the most logical and environmentally sound decision.
Is the Australian Car Industry Stupid?
"The global market shift to low-emitting, fuel-efficient vehicles is going to make it difficult for the local car industry..."
How dumb can an industry be - when blind freddy can see where the global market is going.
Re Australia's car industry, why waste money
Aussie commodore sportswagon equipe new driveaway $39K, (wheelbase 2915, length 4897)
VW Passat highline wagon new driveaway $58K, (wheelbase 2711, 4769)
The passat is roughly 50% dearer at current exchange rates. It's not much shorter than a commodore but it's wheelbase is significantly shorter which determines ride quality to a large extent. Were the exchange rate to dive again what would one buy if there were no aussie made cars left? The current aussie cars stack up well in comparison in my opinion. Perhaps it's time to get over our latte cringe and go and buy one.
Euro vs Aussie made
When comparing like for like the aussie made compares quite favourably. I have chosen to compare the 3.6l passat against the 3.0l commodore because the commodore 3.0l is fit for pupose in this segment. It's a rubbish argument to assume that because you're driving a euro made car it's automatically more environmentally friendly. On top of this the commodore can run on 85% ethanol which I don't believe the VWs can do. Whilst the passat is available in a four cylinder the demography of the market would suggest many buyers would opt for a V6.
passat V6 3.6l wagon petrol 222g/km
touareg V6 3.6l petrol 240g/km
commodore wagon V6 3.0l petrol 219g/km
Were buyers wedded to a four they could get a cruze hatch, the 1.4l turbo of which produces just 153g/km of CO2. I see a great many touaregs around which in yesteryear might have been a berlina or calais. Australians have to get back to deciding what is fit for purpose and making a decision based on such criteria. Perhaps rather than having charging stations for EVs we need to have pools of 4x4s that can be used for the once a year trip to the snow or for a bit of paddock bashing.
cruze 1.4l 153g
cruze 1.8l 166g
mazda 3 2l 187g
corolla 1.8l 171g
focus 2l 167g
Australia's car industry
Government subsidies or not, vehicle manufacturing in Australia is doomed so why waste the money on subsidies.
While vehicle manufacture globally may continue profitably for as long as another decade, as global oil production declines from this decade on, vehicle manufacture globally will come under increasing pressure.
Dan