Our Industry Vision for the Future:
Our industry vision for the future is broken down in higher detail here highlighting areas for consideration and change:
Over 1 million vehicles enter the new car market annually. Of these we currently import 88% of our new vehicles to market and manufacture only 10% domestically. Only 1.9% of vehicles entering the market each year are used imports. After 2017 all vehicles entering the Australian vehicle market will be imported placing greater importance on our after sales parts, repair, and servicing sectors. Despite these facts, much of the debate has been narrowly focused on the viability of used vehicle imports with fear mongering swaying the debate.
The Autoskills Australia Environmental Scan establishes that the automotive industry contributes $38.4 billion per year or 2.6% of GDP to this country with over 360,000 people employed.
When you consider that small businesses comprises about 94% of the automotive industry, we quickly realise that the success of the market is dependent to a large extent on the viability and performance of small business.
Within this $38.4 billion or 2.6% of GDP, the highly misunderstood Automotive aftermarket contributes about a third, at over $11 billion per annum and employs over 40,000 Australians. The aftermarket sector engages in the manufacture and distribution of automotive aftermarket parts, accessories, workshop tools and equipment. Aftermarket manufacturing represents 36% of all automotive manufacturing in Australia, turning over $5.2 billion per annum, exporting $800 million of locally manufactured product and employing 21,000 people.
The aftermarket manufacturing industry operates in a market where products are purchased on innovation, performance and features, rather than price. This places it perfectly within a globally competitive sector. Businesses have been successful because they have made significant investments in R&D and capital equipment with a strong export focus under efficient ‘demand pull’ models.
The aftermarket sector continues to show strong year-on-year growth generated by global demand for specialised personalisation components and is well placed to cash in on booming market demands of China and India.
In 2014, CAMS engaged Ernst & Young, to examine the contribution of Australian four wheeled motorsport. It was revealed that four wheeled motorsport industry generated $2.7 billion toward the Australian economy, with a further $1.2 billion of direct added value and employs over 16,000 FTE jobs.
Consider that this hasn’t accounted for two wheeled motorsport and only partially captures elements grass roots motorsports. Further work to examine all forms of motor sport including 2 wheel and grass roots motorsport would likely push the contribution well over $3 billion per annum. The MAC highlights the economic value motorsport brings at the regional level, through major events and venues. Examples like Bathurst City and Wyong’s CASAR Park development proposal showcase current and potential contributions well. With 201,000 visitors to the 2015 Bathurst 1000, the regional economic benefits of the event, are simply staggering.
The MAC congratulates Senator Muir on his recent motion to recognise the economic contribution and potential of the motorsport industry on the back of the CAMS findings, whilst also showing his support for grass roots motorsport, as another aspect contributing to local and regional economies all year round. Senator’s Bushby and Ruston are also acknowledged for their representation to the senate on the industry. The spin offs from motor sport to the economy are substantial. This is just the beginning of the economic realisations and it is now time we recognise its contribution to the automotive industry too.
The unrealised potential of the wider market is staggering, but we must first recognise the area’s previously over looked and work to identify the needs of the small business that comprise the majority of the industry.
The automotive aftermarket sector is proof there are viable and growing automotive manufacturing sectors in Australia, even in the face of state regulations that don’t particularly support it. Local aftermarket manufacturers produce parts, accessories, workshop tools and specialised components for 4WD, high performance and motorsport applications. Australia are recognised global leaders in suspension, fuel systems, electronics, exhaust, 4WD accessories and recreational adaption’s as a result of the high quality designs, performance, safety benefits and reliability of our products.
With sensible reform the unrealised potential of the aftermarket and motor sport industries is simply staggering. The full growth potential both domestically and internationally within niche markets can be unlocked with sensible nationally consistent regulatory reform.
Modified and personalised vehicles within domestic demand
The diversity of our member base and culture is strongly linked by the freedom to modify vehicles as owners seek to customise, performance enhance, adapt, retrofit, upgrade safety and restore them years, or even decades after release.
The $11 billion Aftermarket Industry and its steady growth, is a testament to enthusiasts desires to express themselves through their vehicles. That passion can start from a family grounding with the model, a new purchase, a child-hood experience, literally anything.
Current regulation inconsistencies between states are restricting industry potential significantly. State based inconsistency and enforcement around modifications are still significant issues to our community. These individual state authority systems, requirements and layers of confusing red tape strangle the Motoring Culture and aftermarket industry by burying users in regulation paperwork that even the best engineers struggle to follow.
Enthusiasts then go on to struggle with the legality of modifications (engineer certified or not) as they travel interstate. It is lunacy that an Australian vehicle owner can drive a legally certified vehicle in their home state, but then be deemed defective in another. It is time for a national solution here.
Enforcement Effects on the Motoring Culture and Industry
Our community have reached breaking point with Police Officers, EPA inspectors, Customs Vehicle Import Inspectors and Roadside Vehicle Inspectors who are not sufficiently trained with vehicle modifications in some states. People with no mechanical background are making judgements on vehicles without knowledge of the standards, measures or mechanisms that govern them.
We cannot continue to send our enforcement officers out like this. They need the relevant education and training to spot the hazards and understand the risks before they go for the book. We can’t break down the stereotypes and attitudes towards enforcement that plague the Motoring Culture and the Automotive Industry supplying products to market, if the enforcement agencies don’t understand the problems.
Given the wide range of vehicles on our roads today and the even wider range of vehicles on our roads in the future, more must be done to address the issue from a national perspective.
Applying National Consistency to grow industry
Vehicle standards in Australia must be nationally consistent for the whole of a vehicle’s life. Especially within a 100% import model for vehicles first supply to market. This approach should be applied regardless to the extent of its age or modifications, provided adequate engineer certification is in place to deem the vehicles are safe and fit for Australian roads at all times.
A seamless national approach can reduce costs incurred by business in complying with unnecessary and inconsistent regulations across jurisdictions. It can also promote activity in small business by effective use of certifying engineers in a manner that can almost self regulate.
The MAC asserts that the National Code of Practice for light vehicle modifications (VSB14) must be rolled out to all states under an applied law system, rather than the current model law system. This is especially necessary as we continue to harmonise with International Design Rules, to prevent state bodies over ruling the national or international vehicle standards with local registration controls. The potential compliance cost savings of $261million per year noted by the IWVTA that are currently passed onto consumers can be quickly eaten up by other losses generated by states ignoring the national consistency approach.
Consider the benefits that National Education, Heavy Vehicle Licensing and Energy Regulator reforms have already had in their respective sectors. Linking the document to the MVSA is an administrative exercise that offers opportunities to save tax payer dollars through cutting red tape and reallocating state resources, without introducing new or increased safety risks.
In addition to administratively linking NCOP LVM (VSB14) to the NRSS and MVSA, the NSW certifying model (the VSCCS) should be included as the basis for operation nationally.
Systems such as the VSCCS are widely accepted while also offering significant efficiencies and effectiveness within the enforcement sphere. This can offer significant savings to government, motorists and industry alike. Current systems are known to require motorists to have vehicles inspected for suspected defects, illegal modifications and safety concerns that could be resolved without cost on the road side by a system that clearly identifies listed approved modifications vehicles. This assures a far more targeted focus on those vehicles avoiding safety and compliance regulations.
The NCOP LVM (VSB14) and VSCCS are widely accepted by industry and enthusiasts as fair, effective, transparent and easy to follow mechanisms for determining the requirements of vehicle modification. This approach can also be applied to personal imports with modifications offering opportunity to cut further unnecessary red tape.
Personally imported vehicle inspections
To regulate safety standards of imported used light vehicles that have been modified, it is recommended by the MAC that import inspection systems harmonise with the NCOP by applying VSB14 and using the same certified engineers from private industry, to conduct inspections to certify the vehicle as safe. This is a consistent and pragmatic approach to ensuring that even modified imported vehicles comply with the same regulations that are enforced within Australia by the states on locally owned and produced vehicles.
For state and federal governments this presents an opportunity to realign resources by implementing better systems that harmonise with personal imports and engineer certified modifications to assure regular checks for vehicle safety occur. It cuts regulatory responsibility from states saving taxpayer dollars by reallocating state road authorities into a registration, auditing, compliance and enforcement roles where the resources are desperately needed.
The MAC recommends an annual learning workshop be held by a partnership between engineer certifiers, enforcement officers, police and regulators to foster relationships and effectively target problem areas as they come to light.
This regulatory reform would provide a consistent mechanism for engineer certified modifications giving the automotive aftermarket and motorsport industry scope, certainty and accountability when developing products to market. It gives consumer confidence promoting increased consumer spending.
It’s time to reassess our national position when it comes to Specialised and Enthusiast Vehicles and personalised imports.
With regard to personalised imports arriving under concessional arrangements as a very small portion of the 1.9% of all vehicles imported, I question the validity of overbearing and convoluted control mechanisms. Streamlining is clearly necessary while maintaining a scheme that does resemble the RAWS scheme. Our community is invested in high value, extreme rarity, specialised performance or intrinsic valued vehicles sold internationally and imported through these schemes.
The additional $2.6 billion spent by Australians consumers in 2011 on a shortlisted 80 imported vehicle models is an excellent example of the Australian consumers being hit in the hip pocket by poor systems and processes. Especially when considering the quality of the vehicles in the list and their compliance with international standards.
Ultimately many of the mass production vehicles also go on to become enthusiast vehicles over time.
Some gain a cult enthusiasm from new (examples: Holden SS Commodore, Ford XR6 Turbo, Nissan Skyline or Toyota 86). Others take longer to develop a community of followers and the reasoning behind it can be very diverse (examples: Toyota Hilux, Mazda MX5).
Some models never become widely available to our enthusiasts due to the import restrictions placed on new or used vehicles by only offering base model variants, to protect our domestic car manufacturing sector (examples: Ford Mustang, Chevrolet Impala). Specialist variants of type approved cars should be available to enthusiasts via alternate import channels. For example: A specialist high performance variant like a Shelby should be available to consumers and not be blocked by ford getting type approval on the volume model
Given the sector is winding up, this provides opportunity to open enthusiast personalised import markets to a wider range of vehicles as they are supplied new to the international market, offering a freedom of choice and value for money not previously enjoyed by Australians.
The international market demand and values placed on enthusiast vehicles are truly incredible. One only has to witness a few classic vehicle auctions to see in excess of $100,000 AU dollars spent on those vehicles. With some vehicles (old and new) selling for a quarter of a million AU dollars, it is highly appropriate that they be assessed separately.
Allowing Australian consumers to purchase from these markets privately, or through specialised import businesses in a simplified manner, would significantly benefit the Australian Motoring Culture and generate revenue through the economy.
The beauty of these vehicles should be open to Australians to enjoy rather than limited to the elite business owners and high rollers by overbearing restrictions and demands.
Consumer protections would need to remain in place and potentially strengthened, by carefully considering methods to determine authenticity of the vehicle. It is critical to prevent vehicle rebirthing and theft issues that already plague the existing systems.
Specialised and Enthusiast Vehicles
Specialised enthusiast vehicle manufacturing is perhaps the area with the most potential. Like the aftermarket industry these low volume supply, user specific vehicles exist within a highly profitable market where they are purchased on innovation, performance and features, rather than price. This places it perfectly within a globally competitive sector.
Like the aftermarket, businesses have been successful because they have made significant investments in R&D and capital equipment with a strong export focus under efficient ‘demand pull’ and “exotic status” based models.
Australia will continue to manufacture specialised enthusiast vehicles as this is an area with solid demand where we demonstrate leadership and solid market performance. Significant opportunity exists here if regulations are adequately considered to promote market growth and absorb significant chunks of the vehicle manufacturer resources as they progressively close down.
The vehicles captured by this grouping are in many cases specialised for a purpose and while the risk of compliance with vehicle standards are higher their uses or probabilities are polar opposites. These vehicles are not daily drivers used in commuter bump and grinds. Some of them may never even be used on a public road.
The UK Model – A case for change (by Rob Bryden – MAC Representative)
The Motoring Enthusiast Culture in Australia is strong. It is made up of a diverse group of people from all walks of life, who contribute a considerable amount to the Australian economy every week, every year.
There is a whole industry around personalising vehicles, motorsport and the motoring lifestyle, that present a real opportunity for economic growth and jobs in Australia. If we take the handbrake off.
We need to get rid of the complexity and the over regulation that plague this industry and the community, and hold it back from achieving its full potential. Fully realised, this sector could become the new engine room for the Automotive Industry.
With car manufacturing in this country coming to an end, it is crucial we look at developing niche markets in Australia focusing on specialist and enthusiast vehicles and components. We are world renown for our quality components and our innovation, and we don’t want to lose those skills.
The desire to personalise vehicles is a world-wide phenomena and many countries have developed strong economies around this industry. Austrades presented evidence at the Senate Auto Inquiry recently, highlighting export opportunities in China, with the growing middle class and their desire to personalise their vehicles. The same opportunity exists here in Australia.
However, in order to realise this potential we need to develop a regulatory framework that supports the growth of these industries, one that is based on safety not compliance, similar to what they do in the UK.
We hereby present a cohesive, common sense plan for reform in order to encourage development of a specialist small- medium business based, high value motor vehicle building and component industry.
The plan has been formulated following extensive research, review of the Productivity Commission Report and Submissions, numerous interviews, involvement in the MVSA review and visits to both the UK and Germany to review their Compliance (design rule) Regulations and motor vehicle business operations, visits to existing small- medium businesses in the area both here and overseas, liaison with key Industry Bodies, interaction with the present Regulator and review of international Regulations and Regulators.
The plan involves recognising that there is a ‘mainstream vehicle’ market and a ‘specialist / enthusiast vehicle’ market, that each must be treated separately and that rules and attitude in the Regulator be adopted to encourage, rather than stifle, development in the high value specialist / enthusiast vehicle arena in which Australia can compete with the world’s best.
The research clearly indicates that a very successful small-medium based low volume specialist and enthusiast vehicle design, building and aftermarket industry can be encouraged and grown in Australia, along the highly successful UK regulatory and industry lines.
This will require simple reform of the ADRs to easily and cheaply adopt internationally accepted standards at both the mainstream market level and in the specialist and enthusiast vehicle arena and replace the restrictive local rules presently in place. It will require recognition that the two markets require different compliance approaches, which will result in development in that industry, cost savings to the industry and therefore cost savings to the consumer.
It allows significant savings in administrative costs in the Department as Compliance issues become ‘’self-certification ‘’ in line with the USA / Canadian mode and Departmental staff numbers can be significantly reduced.
Overseas experience shows that with the correct Legislative framework and an attitudinal shift in the Regulator, jobs in the motor industry can grow via development of a specialist and enthusiast vehicle design, building and after-market component industry. This is the successful model employed in the UK where tens of thousands of jobs lie in this specialist area of the industry and billons of export Pounds are earnt annually.
This UK model should be followed, encouraging the building of a strong, specialised high value, high skill motor vehicle and after-market component industry.
As motoring enthusiasts we promote the accessibility of specialised enthusiast vehicles by removing the luxury car tax and streamlining systems for personal / enthusiast imports, considering a separate code and support for manufactured specialist enthusiast vehicles and promoting the consideration of the UK industry model for industry growth here in Australia.
Enthusiast vehicles should not be out of reach to those who aspire to own one. We have the skills, the motivation and now the capital resources left by the mass vehicle manufacturing sectors to make the shift with minimal fuss. We have the regulatory opportunities in front of us. There will never be a better time than now for this type of reform to assure a wider scope of vehicles and vehicle variants is available to Australians.
To assure this is possible government would also need to assure manufacturers can access interim funding to expand operations through the provisions of the ATS.
The MAC strongly supports the call by the AAAA to establish testing and prototyping facilities in Australia as part of an aftermarket lab. The industry is R&D intensive but is quick to market. Products quickly take off domestically and globally within most market conditions.
An Australian Automotive Aftermarket Lab would be a meaningful contribution to expanding this industry by supporting the growth of automotive engineering products, innovations, expertise and R&D in Australia.
Australia has a significant record in the design, engineering and manufacture of performance racing and motor sport technologies and components within the motorsport sector. We can build on what we do well by promoting the development of a Motor Sport Centre for Excellence with increased funding support from government.
Motorsport is the fourth most watched sport in terms of attendance. While it is recognised as an elite sport, motorsport received only $340,000 of development funding from government, drastically less than other sports (swimming, sailing etc) where contributions can be upward of $8 million annually.
A Motor Sport Centre of Excellence would include motor sport training and development to foster emerging driving and engineering talents as well as encourage automotive innovation, design, and niche manufacturing opportunities. The CAMS submission sights Silverstone Park (UK) as an example of a working model.
The MAC calls for consideration of opportunities to include motorsport ventures within a broader funding initiative of the ATS, prior to it’s wind up in 2017, to provide opportunities for product innovation and growth within the automotive industry.
Motor sport and the automotive aftermarket can work together to retain skills and jobs in Australia. Australia has a vibrant and profitable aftermarket industry, manufacturing and distributing quality automotive components domestically and for export.
In addition to this we should also be looking to grow employment and presence of our industry by developing a national marketing campaign to attract people to the Industry. Part of the challenge nationally is working to change the perceptions. We could be promoting our areas of excellence globally and domestically to grow the industry presence and attract private sector investment.
We can extract benefits in the road safety space, value adding to investments made within motorsport venues and the centre of excellence and aftermarket lab proposals.
We can reduce the cost of road trauma by making venues available for use by the driver training industry, to encourage competency based driver training, low risk driver training, young driver programs and behavioural testing. The facilities being used for technology proving grounds can also be used to develop driver training packages and proving regimes for emerging vehicle safety technologies such as autonomous braking and driverless technology.
In the safer people space, the MAC have indentified that changing driver behaviours and attitude is key to dramatic reductions in the $27 billion annual cost of road trauma. These venues offer substantial synergies that driver trainers can use to maximise the benefits in this space by making courses like the NSW Government and industry approved safe drivers courses.