Strong Aussie dollar may force Toyota pullout

Posted on Monday 29 October 2007


Australian car makers are facing tough times. The Australian dollar is at a 23-year high, and that means in-country production is more expensive than overseas production. For Toyota, the Altona plant south of Melbourne and its 3,500 workers is becoming a heavy burden. So heavy that Toyota wants the Australian government to change its tariff scheme or the Japanese car maker may be forced to shut down Australian production altogether.

Tariff cuts are planned to reduce the tax on imported vehicles to just five percent from the current ten percent. Toyota’s executive vice-president Tokuichi Uranishi has asked the Australian government to freeze tariffs at ten percent in order to maintain cost competitiveness, reports the Australian daily theHerald Sun. The struggling Aussie auto industry already receives over AUS$7 billion per year in government aid.



Toyota doesn’t want to leave Australia, however. The car maker considers the Australian car market to be very important. It is still moving forward with plans to produce the Camry hybrid (pictured) in Altona, and has other future plans for the Aussie supply chain. No direct threats to close the Altona plant have been made yet, but Toyota has implied that unless the tariffs are frozen at current levels, the car maker would be forced to stop production of vehicles in Australia and lay off thousands of workers.

Toyota Australia is currently losing more money producing cars domestically than it is making by importing Japanese-made models. Competition from Toyota Thailand, which is already in production of a right-hand-drive Camry hybrid, is making the situation even more dire for Toyota’s Australian division.