Market Insight: Changing origins of new cars

THE country of origin mix for new cars has taken a beating since the beginning of the COVID-19 pandemic as car-makers continuously monitor costs to ensure the products remain efficient along the entire production to retail chain and, ultimately, return the highest possible margin.

It is not only COVID-19 that has hammered manufacturers, their suppliers and their service providers.

The invasion of Ukraine has shaken up the supply of components, particularly wiring harnesses, to many European car-makers while the withdrawal of presence in Russia by global OEMs and automotive retailers has led to more volume for other markets.

By shuffling production sites out of Russia and securing them in safer zones, car-makers copped delays in moving ‘house’ and the enormous costs of abandoning one market to establish elsewhere – especially Renault.

It is not only happening in the former Soviet Union. For example, in India, changes in government policy affect the tax subsidies of foreign car-makers, which may sour – or improve – the return on investment in that country.

Labour unions have also influenced the viability of production plants in the United States, while changes in costs and locations of transport in Spain could spell the end of the old ways of moving both raw materials and finished products.

In the past seven years, the once-powerful car-building county of Britain has seen a 74 per cent plunge in deliveries to the Australian market.

This is a precipitous decline from a country that was one of the original suppliers of vehicles to Australia and formed the backbone of the nation’s transport sector almost unchallenged for almost 70 years.

Much of it relates to the withdrawal of Honda’s production facilities in Swindon as Australia once sourced vehicles from this plant – including the CR-V and Civic – and Nissan, from which the Sunderland plant variously supplied models like the X-Trail, Qashqai and Juke, as well as hatchback variants of the Pulsar.

Like most car-makers, those in the UK have also been affected more recently by production problems stemming from labour issues attributed to COVID-19, currency exchange and supply chain instability due to Brexit and the weak supply of components that include semiconductors and wiring looms.

This has severely affected the importation of models from Jaguar and Land Rover (down 43 and 38.8 per cent year-to-date respectively); Mini (down 15.7 per cent); and to a lesser extent, Bentley (down 8.8 per cent).

In the year-to-date August sales data for Australia, vehicles from Britain are down 57.7 per cent compared with the corresponding period in 2021 – a whopping fall of 8688 units in one year.

The supply variation from most other countries is not as acute. The Czech Republic, which supplies Skoda, hatchback versions of the Hyundai i30 N and previously some Australia-bound Hyundai Tucsons, is down 40.9 per cent in the 12 month period.

Since 2016, the Czech Republic’s contribution to the Australian car parc has dropped 53.5 per cent as some manufacturers – such as Hyundai – sourced volume-selling products from other global factories.

While importation from some countries has fallen, the US is up 20 per cent – on products from Jeep and BMW, among others – as is India, which has boosted exports of vehicles to Australia by 86.2 per cent in the year-to-date August figures.

Its contribution is also up 43.5 per cent on that of 2016.

This is despite Ford cancelling the sale of the Indian-made EcoSport SUV, with the boost attributed to Jeep sourcing its Compass from India and growing sales of Mahindra and Tata commercial vehicles.

Increased sales of US-built automobiles is up 20.3 per cent on the same January-August period last year, while across its border, Mexico has a 32.8 per cent fall in cars to Australia.

Mexico previously made some Chevrolet and Audi (Q5) products for global markets including Australia. It also makes the Volkswagen Tiguan Allspace for this market.

While many countries are down in deliveries to Australia, the main exceptions remain China (up 38.3 per cent) and more recently, Austria (up 21.8 per cent) – the latter making some BMW 5 Series and Z4, the Mercedes-Benz G-Class and Jaguar’s I-Pace and E-Pace.