UnafFORDable cars

Ford Motor Company of Australia stamping plant...

The Ford Australia boss announce the closure of its Australian assembly plants by 2016 citing reasons that included high costs and a strong Australian dollar.

He also said that the cost of producing a car in Australia is twice that of Europe’s and four times more than vehicles produced in Asia.

There lies the real problem and answer. Whether its wages, parts or taxes, Australia is not competitive at building cars, so why is government so insistent on subsidising such a loss making industry?

I see little reason to buy an Australian built vehicle which provides that same utility as any other, yet costs more.

Countries such as Singapore & Finland function perfectly well without a car manufacturing sector while we are anchored to historic biases that don’t make financial sense.

But I need to ask…….if vehicles in Asia cost four times less to produce than a local car, why aren’t Toyota’s, Nissan’s, Hyundai’s & Honda’s sold in Australia priced at a quarter the price of an equivalently Aussie vehicle in its respective class?

Perhaps Ford Australia should “thank” the Australian Government for imposing such high import duties against these competitors which has allowed them to stay in business for the past couple decades.

This is an example of how protectionism in a free market capitalism economy does not work, over the long run.

We’ll talk about socialism another time.

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