The price of drive-away cars will increase by as much as $1000 under the carbon tax from July 1, the industry claims.
Manufacturers report in the first three years production costs might increase by 0.5% or more, in part because the steel industry will be heavily affected with an increase in cost between 5-10%.
According to a report by US non-profit group Resources for the Future: “Much of the effort to reduce pollution from vehicles to date has been in the form of increasingly strict emissions standards on new cars sold in developed countries.”
The federal Department of Infrastructure and Transport states that carbon pricing will reduce motor vehicle emissions to improve air quality and to minimise greenhouse emissions. By introducing carbon tax, the government hopes to influence motor vehicle construction into becoming more energy-efficient and environmentally friendly.
According to the department — which says the industry is responsible for a “large and growing share of greenhouse gas emissions worldwide”, including most of the carbon monoxide and a large share of the hydrocarbons (HC) and nitrogen oxides (NOx) in the atmosphere — between now and 2020 construction costs will rise between 1.4% and 2.0%.
Mike Devereux, the boss of General Motors Holden and president of the Federal Chamber of Automotive Industries, has previously said the estimated cost of a carbon tax to Australia’s three local auto manufacturers — Toyota, Holden and Ford — will be $40-50 million each year. Toyota Australia CEO Max Yasuda says his company’s costs will rise by $15 million a year, increasing the cost of a locally manufactured vehicle by $112.
In Toyota’s sustainability report, the company estimated the carbon emissions from fuel use over a Camry’s life as around 44 tonnes, or 33 tonnes for a hybrid Camry. It suggests 81% of lifetime emissions are from on road use — but the company and the public will not be taxed directly for fuel under the carbon tax.
Production also contributes significantly to a car’s emissions. Suppliers and raw materials contribute 8.62 tonnes of emissions and manufacturing also contributes 1.5 tonnes per car. Logistics, office and warehouse and dealership emissions combined total less than 1 tonne of CO2 emissions per car.
Yasuda says while the company supports action on climate change and the environment, a lower starting price would have been preferable.
“The local automotive industry is currently facing difficult business conditions including the high Australian dollar, increased overseas competition and a fragile local supply chain,” he says on the company website. “The adoption of a carbon tax before other countries will have an adverse effect on our business, because in addition to the financial cost, Toyota Australia is trade-exposed, both as an exporter and because we face actual import competition. Our business is already under competitive pressure from overseas vehicle importers and the carbon tax will impact our profitability.”
Holden made a similar claim in its government submission in 2008. The company warned that if costs in Australia became too high — particularly in context of a strong Australian dollar — emerging markets in China, Russia, India and Thailand may become more attractive:
“GM Holden must compete with other GM plants around the world for global investment and market allocations,” the report said. “Where multiple sourcing of a global vehicle platform is involved, Australia figures poorly. Production allocation decisions are cost-driven and market size leads to a requirement for high export ratios and therefore, high logistical cost penalties. GM Holden’s ongoing challenge is to make Australia an attractive destination for these global platforms.”
In the meantime, companies are attempting to reduce emissions — for economic and environmental reasons. Toyota is currently installing a trigeneration plant at its headquarters, and implementing Toyota Environment Management Systems at all sites. An Environmental Dealership program was launched recently to help dealerships embed environmental thinking and sustainable business practices into their daily operations.
Toyota sets targets to reduce carbon dioxide emissions from gas and electricity consumption in its production plant. During the past five years the company reduced its manufacturing CO2 emissions by 17.5% per vehicle.
Holden is focused on fuel efficiency and carbon emission reduction technologies. With the help of $39.8 million from the federal government’s Green Car Innovation Fund in 2011, it will make the Commodore greener by using aluminium body panels to reduce vehicle weight.
The innovations, the company says, will “help reduce fuel consumption by more than 7%. This reduction in fuel consumption would save around 3.6 million litres of fuel and reduce CO2 emissions from the Commodore fleet by around 9000 tonnes a year.”