China FTA confusion

Our latest free trade partner is not about to reshape Australia’s automotive landscape

BARRY PARK

AUSTRALIA’S largest importer of Chinese-made cars says June’s free trade agreement will do little to expand the fortunes of the Asian manufacturing giant.

Daniel Cotterill, spokesman for Ateco Automotive, said external factors such as the sharp drop in the Australian dollar and other cost pressures had more bearing on prices than a five percent fall in the tariff on cars imported from China.

“In the real world, the percentage is taken off the FOB, or free on-board price, which is significantly lower than the retail price for a whole bunch of reasons including freight, customs, all sorts of other charges along the way, not to mention the profits of the importer and dealer,” Cotterill told Wheels. “Also, the manufacturers tend to take the opportunity to claw a little bit back for themselves.”

“So it [the five percent tariff reduction] will be helpful, but perhaps not to the extent that some people will think.”

More significantly, Ateco pays for its Chinese cars in US dollars, so the 30 percent slide in the value of the Australian dollar over the last two years has made them much more expensive.

Sales of Chinese-made cars have slumped from 12,139 in 2012 to just 4154 last year. And it’s looking even worse this year with only 1161 sold in the first half – just 0.2 percent of the market.

One contentious part of the FTA is a relaxation of visa requirements for Chinese car mechanics and auto electricians to work in Australia.

Tony Abbott and the Department of Trade have both moved to reassure a wary industry that nothing will change, but some are not so sure.

Victorian Automobile Chamber of Commerce CEO Geoff Gwilym said the government’s claim that it was “streamlining” guidelines for allowing Chinese workers into Australia was too vague to determine what influence it would ultimately have on the local service and repair industry.

“It’s interesting that they use the words ‘could be assessed’ and ‘may be assessed’ – what they describe as streamlining, we might call fast-tracking,” Gwilym said. “It’s really hard to know what it means in real life.”

Done deals

FREE trade agreements are expected to cover about seven out of every 10 new cars sold in Australia in 2015.

CHINA

CHERY, FOTON, GREAT WALL, JMC, LDV, MG

4154 2014 sales 3000 2015 projection

JAPAN

HONDA, INFINITI, ISUZU, LEXUS, MAZDA, MITSUBISHI, NISSAN, SUBARU, TOYOTA

329,009 2014 sales 330,000 2015 projection

KOREA

HOLDEN, HYUNDAI, KIA, SSANGYONG

130,777 2014 sales 135,000 2015 projection

MALAYSIA

PROTON

814 2014 sales 350 2015 projection

THAILAND

FORD, HOLDEN, HONDA, ISUZU, MAZDA, MITSUBISHI, NISSAN, SUZUKI, TOYOTA

226,936 2014 sales 280,000 2015 projection

UNITED STATES

BMW, CHRYSLER, DODGE, JEEP, MERCEDES, TESLA, TOYOTA

58,143 2014 sales 70,000 2015 projection Australia has no free trade agreements with Europe or the UK.

We are currently in talks with India and Indonesia.