Tariff talk part of a range of issues, says Conomos

TOYOTA’S chairman emeritus John Conomos has admitted the car industry had discussed a car import tariff freeze of 10 per cent beyond 2010 with the Federal Government in an effort to protect the local industry.

Just before Christmas, the four local car-makers Holden, Ford, Toyota and Mitsubishi went cap-in-hand to the Federal Government seeking another $1 billion for the industry as it struggles to maintain viability.

The tariff issue was also raised as local car-makers battle ongoing viability and falling large-car sales, with a request that tariffs be frozen at 10 per cent from 2010.

Previously the industry had accepted that tariffs would reduce to 5 per cent from 2010, which would have made imported vehicles even more competitive against locally built cars.

The tariff question is a double-edged sword for the industry whom already benefit from a free trade agreement with Thailand.

Under the Thai FTA, all four car-manufacturers get some pricing relief for some of their light commercials which are built in Thailand. Importer Nissan has also just announced it would source the slow-selling Tiida from Thailand to make it more price competitive.

Mr Conomos said some aspects of the Christmas meeting with the Federal Government had been taken out of context.

"It was a progressive discussion with government in keeping with the Auto Industry Strategic Group and was not a request or demand, just part of a routine dialogue," he said.

"It was done on a confidential basis and leaked to the press, as we all know, and a little bit out of context."The strength of the Australian dollar, the move away from six-cylinder sedans and the rise of import competition out of Asia are causing concern for the local players.

"Just before Christmas we had a scheduled meeting with the Industry Minister (Ian Macfarlane) to discuss the progressive content of those internal reviews and research between what the car-makers could do for the parts makers, what the parts makers could do to substantiate their own survival and what else they could do to become more competitive in the face of massive competition from China and Asia and perhaps emerging India," Mr Conomos said.

"So part of that on-going discussion was what, really, does the car industry need."

Mr Macfarlane (left) has asked the industry’s four major players to review their own situations and report back early this year.

"We don’t expect to solve this overnight, or in fact reach any definitive conclusions probably until at least when the revue period is due in 2008," Mr Conomos said.

"We’re running until 2008 with the current plan."Mr Macfarlane has voiced government concern over the local industry’s viability, which has seen domestic sales slip from 70 per cent of the market in 1998 to just 20 per cent last year.

He is preparing a new industry policy blueprint to be unveiled later this year.

The fact that the local car-makers have gone to the government on the back of monies already handed out under the Automotive Competitiveness and Investment Scheme (ACIS) has not gone down well with Canberra.

ACIS has so far delivered more than $3.2 billion in industry assistance since 2001 and $600 million last year.

Notwithstanding the current industry woes, Mr Conomos believes Toyota can substantially improve its own profitability between now and 2010.

"The way we’ll do that, notwithstanding the strength of the Australian dollar and exports, but greatly reducing and improving efficiencies in our locally made cars is one of the ways in which we believe we’ll be able to be successful," he said.

"We intend to make a very, very large effort to improve our profitability, certainly in the next four to five years."