This report is going to discuss why car manufacturing industry in Australia closing by using five forces analysis which are the barriers of entry, competitors, purchasing power of buyers, supplies and subsidies segments, and a life cycle analysis.
Five forces analysis
Barriers of entry
To being with the barriers of entry which including strong currency and higher labor have the most significant impacts on auto making industry. In 2013, Holden would cut 12% of its workforce and has announced a three-year pay freeze agreement to the reminding workers to keep operates the manufacturing plant in South Australia (Thurlow, R. 2013). Moreover, a strong currency not only lead to less competitive on nation exportation but also increases the amount of cheaper imports from emerging market like China and Thailand caused by globalization. For instant, China which enjoys plenty of human power which strengthen its competitive of export products (Curran, E. 2013). Australian manufacturers, therefore, have lower competitive power against imported goods and services. Although the total number of car sales increased, the sale of Australian-made vehicles has significant (20%) fall as Thurlow, R. & Glynn, J. 2013, stated. It seems barriers of entry blocked the auto making industry hardly.
Power of rivalry
Furthermore, small domestic market contributes highly damage to automotive industry. According to the Australian’s department of industry, there are 66 vehicles brand can be chosen by customers, compare with 51 in U.S (AMS), according to Timothy,C. 2014,even less only 36 brands. Therefore, local car-makers are hard to survive in this tiny market without any advantages. Unfortunately, active used-car market which cars have been registered more than 15 years still can be traded in market and drove on the road. Besides, a well-built massive public transportation system as inhered emeries are never stops to invade local car manufacturing industry as Victorian Government has announced Melbourne’s transportation fee will be reduced after 1/1/2015. Potential new car owner will purchase a cheaper used car or catch the cheaper cost transportation rather than get a brand new car. Therefore, the impact of competitor cannot be undertaken.
Power of substitute
Factor of subsidies has the third high power to led automotive makers exit from Australia. As of the 2010-11 fiscal year, car manufacturing industry is the second most heavily subsidized business (8.5%) in Australia (Ford's Exit Down Under. 2013,). Holden, for example, one of the biggest car-making producers, has decided to close all plants in Australia, although it has been injected $275 million in aid in 2013(Thurlow, R. 2013,). Beyond that, Curran, E. 2013, claimed that Australian Government had signed an agreement with auto-manufacturing sector which only purchases locally-made-car. Regrettably, all policies do not stop car manufacturing sector collapsing.
The purchasing power of buyer