Car Industry Handouts In Australia  

The SMH reports the US isn't the only location carmakers are looking for handouts - the Australian government is being asked to help fund new (thankfully greener) vehicle designs as well - Rudd's $6.2bn car plan.

The Rudd Government will double its assistance to the ailing car industry to more than $6 billion over the next 13 years in a bid to retain thousands of jobs and valuable exports.

The assistance includes an extra $3.4 billion in funding announced today as part of the Government's strategy to protect jobs and focus the country's car industry on becoming more efficient.

The Government's 'A New Car Plan For A Greener Future' followed a review of the future of car industry assistance headed by former Victorian premier Steve Bracks released earlier in the year.

The added funds bring to $6.2 billion in Federal aid for the industry, a move likely to be welcomed by companies facing reduced demand at home and abroad as the global economic slowdown saps demand.

''In a world now beleaguered by likely recession and financial turmoil, the new policy announcements help provide the proactive influence needed to boost the international competitiveness of our automotive industry," said Zoran Angelkovski, president of the Federation of Automotive Products Manufacturers. The policy change will also "help us meet the critical challenges of a lower-carbon economy,'' he said.

Less welcomed, though, will be the Government's decision to support recommendation by Bracks to halve car tariffs to 5% from 10% in 2010. Hundreds of jobs have been axed in the automotive industry, including about 1400 jobs at Ford's Victorian operations to be cut over the next two years. ...

Mr Rudd said Australia's car industry was ''part of the future.'' He said shifting the industry towards producing low emission and fuel-efficient cars would ensure its long-term viability despite the current economic "doom and gloom''.

Fuel-efficient vehicle technology also looks acutely vulnerable to falling oil prices. Cash-strapped auto giant General Motors last week announced it was suspending new product development efforts, including several hybrid models.

But GM will continue developing the plug-in hybrid Chevrolet Volt, which could go 40 miles on one charge. Energy security experts say such capability is vital since it would replace imported oil with power from the electrical grid derived from coal, natural gas, wind, and other domestically derived sources.

But will GM stay with the Volt if oil prices drop further? Will consumers pay $40,000 for it if gas is $2.50 per gallon?

“With the economy in the dumps and gas prices coming down, people right now are thinking ‘I’ll hold onto my car and drive it less … rather than moving to a more fuel-efficient car,’ ” says Bradley Berman, editor and founder of Hybridcars­.com, a website that focuses on hybrid vehicle trends.

For the US auto industry, recession may be a greater threat than cheap gas. “Interest in hybrids is not anymore at the fever pitch with long lines, but it remains solid,” Mr. Berman says. “A lot of people still want higher fuel economy just to save money.”

The big question, he says, is what happens when the economy strengthens and people start buying cars again. Will they buy fuel-efficient vehicles – and will Detroit offer them in volume?

“There’s going to be plenty of demand to absorb the initial ability of car companies to produce these new fuel-efficient vehicles,” says Reid Detchon, executive director of the Energy Future Coalition, a coalition of energy security experts and environmental groups who favor a shift to 25 percent renewable energy by 2025.

“If gas prices do go under $2 a gallon, well, there would be less excitement about plug-in hybrids,” Mr. Detchon admits. “But there’s really a lot less concern about gas prices these days – and a lot more about US energy security. That’s a big difference from the 1980s. So I think that detaching the US from dependence on Middle Eastern oil will continue to be a concern that will drive policy.”