‘Reckoning’: Aussie car boss warns of industry ‘collapse’
One of Australia’s leading automotive figures says the industry will face a ‘reckoning’ with a wave of ‘consolidation and collapse’ coming for major brands.
Honda Australia’s chief executive Jay Joseph has warned that not all car makers competing in Australia will survive, and predicts a wave of ‘consolidation and collapse’ is coming for Chinese brands.
“It doesn’t seem realistic that all the brands that are competing in Australia today will remain viable,” Joseph said.
“There are brands that are [selling] less than one per cent [of cars sold in Australia].
“They’re not selling enough vehicles to sustain a dealer network that would be able to service vehicles in a profitable way.”
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Joseph, who had a 27-year tenure at American Honda Motor Co before his appointment as CEO, says Australia is “the most competitive and fragmented auto market in the world” with some European and Asian car makers struggling to remain profitable.
He also accused some automakers of ‘designing by superstition’.
“There are 70 brands in this country, vying for 1.2 million new car sales per year. Compared to all of my prior history in the United States, where there’s 42 brands competing for 16 million new car sales. That’s a much easier pie to slice.”
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CHINA CAR BRANDS IN TROUBLE
Joseph believes that Chinese car brands will also face a turbulent decade after their meteoric rise on the global market.
“It seems unrealistic that after a period of rapid growth, there won’t be consolidation and collapse, and some of those companies will not survive.”
In Australia, China is now the second-largest source of new vehicles behind Japan, with brands like BYD, GWM and MG gaining popularity.
“Credit where it’s due, the Chinese car makers have been on the steepest learning curve in the history of the auto industry. They have gone from zero to competitive, faster than any other nation in the history of the auto industry.”
But Joseph argued that some newer entrants are still “designing by superstition” rather than through engineering experience gained over time.
“One of our advantages at Honda is that we’ve documented everything that ever went wrong with any one of our products,” he said.
“If you design from a philosophy of understanding how to prevent something from failing, that’s very different than just copying a design and hoping it works.”
Joseph said quality differences may be less pronounced in the electric era, where powertrains have fewer moving parts and more standardised components, but manufacturing discipline remains an important part of the process.
“It matters how you attach the inner door panel,” he said.
“It matters how you install the glass. The sequence of doing things affects whether your headliners fall down after five years of UV abuse, or just normal wear and tear.”
Looking ahead, Joseph predicts industry-wide upheaval in the next decade.
“The auto industry has these reckonings, especially in times of financial crisis, which seem to happen about once every 10 or 12 years,” he said.
“We’ll see who’s still standing at the end.”
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Originally published as ‘Reckoning’: Aussie car boss warns of industry ‘collapse’
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