The Australian car industry must look for opportunities flowing from a future free trade agreement with China rather than assume it will be swamped by cheap Chinese-made vehicles, Ford Australia president Tom Gorman has said.
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“In my view, China represents one of the biggest strategic business challenges we likely will face in our working careers,” Gorman told an American Chamber of Commerce in Australia lunch, according to an Asia Pulse report, adding: “Our challenge is to carefully determine how we can best engage our relatively small industry with China’s significantly larger and obviously rapidly-growing industry. There can be real opportunities for those of us that are fleet-of-footed, innovative and tenacious.”
Gorman reportedly said he was confident of the near-term outlook for the domestic Australian car industry because the national economic outlook was good and consumer confidence was high.
According to Asia Pulse, he said that in 2025 demand for vehicles in Australia was likely to be about 15-25% higher than it is today, at about 1.2 million vehicles, and the source of many imported vehicles would change.
“Countries like China and India will have a more significant role, and today’s low-cost source countries like Korea, they likely will move up the cost ladder and be replaced by others,” Gorman reportedly said.
Asis Pulse said Gorman anticipated that the internal combustion engine would still be dominant, but hydrogen-powered fuel cell vehicles would be more of a reality.
Asked whether he expected the local content of Australian-made cars to be lower in 10 years, Gorman reportedly said that, as a manufacturer, Ford was in no position to mandate where tier-one suppliers sourced their products.
“What is mostly feared by people is the fact that we talk a lot about cost,” he said, according to the report.
He “fundamentally” disagreed with the common assumption that if you wanted to lower costs you had to go to a lower-cost country, Asia Pulse said.
Inefficiencies were not just related to the location of product assembly, but could also be found in logistics, product design and relationships with suppliers, Gorman said, according to the report.
