The Australian motor manufacturing industry has recently faced a series of tough challenges including General Motors’ subsidiary Holden’s announcement that it would cut 600 jobs from its Adelaide-based plant, as well as the Japanese automotive company Mitsubishi’s decision to close its local production facility altogether. While Japan’s Bridgestone confirmed its commitment to maintaining its Australian operations, it did declare that it will be raising product prices in order to adapt to the rising costs of raw materials.

The Sydney Morning Herald recently reported that Australia’s car producers will need to invest billions of dollars in the local industry over the next few years to ensure a profitable future. The Federal Chamber of Automotive Industries (FCAI) and the chairman and managing director of GM Holden, stated that a strong dollar, record high fuel prices and commodity costs had placed immense pressure on manufacturers and suppliers, which has led to the Australian automotive industry having to deal with one of the most serious setbacks yet.

Following Mitsubishi’s departure, the industry will be left with only three manufacturers, Toyota, Holden and Ford, with the former easily obtaining the role of market leader with around 20% of sales, while GM Holden and Ford follow in second and third respectively. However, the low number of manufacturers provides opportunity for new investors, while the government’s support for ‘green’ car projects has already attracted additional investment from Toyota

A review of Australia’s car industry by former Victorian premier Steve Bracks, suggested that over the next decade, the motor manufacturing industry is likely to see some of the biggest changes yet. Mr Bracks has called for the federal government to spend more money to help the sector adapt to change. Other recommendations include reducing the passenger motor vehicle tariff from 10 percent to 5 percent by 2010.