Toyota’s decision to quit Australia doesn’t stack up

We’ve all heard the news. Toyota is to end its vehicle and engine production in Australia by the end of 2017 and about 2,500 jobs are set to be lost as a result of this decision.

“We believed that we should continue producing vehicles in Australia, and Toyota and its workforce here made every effort,” said Toyota president Akio Toyoda.

“However, various negative factors such as an extremely competitive market and a strong Australian dollar, together with forecasts of a reduction in the total scale of vehicle production in Australia, have forced us to make this painful decision.”

Yet late last week Japan Today reported that:

Toyota has shifted into high gear, with the world’s largest automaker tipping a record annual profit after more than doubling its nine-month earnings to 1.52 trillion yen thanks to the yen’s sharp decline and surging sedan sales.

The buoyant results underscore a recovery not only for the Camry and Corolla maker but also for rival Japanese auto giants including Nissan and Honda.

The trio have been big winners over the past year as a sharp drop in the yen inflated exporters’ repatriated profits, further boosted by improved overseas demand in key markets including the United States and China.

On Tuesday, Toyota said it earned 1.52 trillion yen between April and December on sales of 19.12 trillion yen—propelled by a five-fold jump in third-quarter earnings.

It also boosted its fiscal year to March profit forecast to a record 1.90 trillion yen.

For your information, one yen is roughly about eleven Australian cents. That’s still a hell of a lot of money.

Perhaps the economists amongst us can explain why Toyota can’t spare a few yen to invest in Australia. To me it just doesn’t stack up.

Toyota Camry ... the Japanese car maker says the strong Australian dollar is making exports "unviable".

11 comments on “Toyota’s decision to quit Australia doesn’t stack up

  1. Migs
    What no one here you included understands at some point in time the Money runs out. Even for Ford GM and Toyota .
    Continued losses by car manufacturers cannot be sustained.
    None of us like it but it is good night nurse for making Aussie cars.
    We cannot compete.
    Sludgies why is this?

  2. “We cannot compete” does not equate to “continued losses” – I’m not sure about Toyota Australia’s actual profit per produced vehicle but I would find it hard to believe that it’s been making cars for less than it’s been selling them.

    Capitalism is no longer about “making a buck”. It’s not about making a profit, or fulfilling your company’s clients’ needs at a mutually agreeable price. Profitable companies like Toyota, like ABC Learning Centres, and potentially like fossil fuel companies such as British Gas, can easily go under because of their dependence on the share market. Modern capitalism rewards the megacorp and growth, but growth has limits.

    A company can be brought low by other businesses competing for investor share ownership; by overselling your potential instead of your steady and continued profits; or by your business being potentially cheaper, thus easier to grow, elsewhere. It’s not about a company being profitable. In our globalised world, it’s about the fact that it might be slightly more profitable somewhere you don’t have to pay your workers.

  3. Not an economist, but why would a Japanese company invest in Australia in preference to their own country, with better economy of scale? The population of greater Tokyo is ~30million alone…

  4. This entire house of cards has me very suspicious. Ford, Holden & Toyota announce they are all shutting up shop in under 12 months.

    Someone, somewhere knew that Toyota was soon to follow – except for us mushrooms.

    As for wages being to blame – bullshit. Plenty of other OECD countries manage a LIVEABLE wage in parity with cost of living – but Australia can’t? Bullshit!

    All the subsidies (our taxes) paid out by both sides of the political fence for years and now come to be worth zilch. More bullshit.

    Personal responsibility, eh? I’d like to personally take Hockey/IPA & Co for a good hard look at how people really are personally coping with big business – room for personal negotiation? I don’t think so.

    Every day that passes, I think I could not be any more outraged by this federal government and every day I reach new levels.

    If, these soon to be empty manufacturing plants were scheduled for use in producing renewable technology of all and any description – that I could stomach, that would be worth a government subsidy.

    Developing severe case of Tourette’s… bye for now.

  5. Some telling figures, and again proof what hypocrites the right wing are.

    We spend $1.5 billion on the car industry and get out $21 billion in yearly production. Meanwhile, we spend something like $33 billion in tax concessions on superannuation, $4.5 billion on fuel rebates to the mining industry, and $1.5 billion in assistance to the private healthcare industry.

    Bet anything that in Hockey’s upcoming savage cuts being promised the rebates to the wealthy aren’t touched in anyway. It seems taxpayers propping up the wealthy isn’t giving them an entitlement but a necessity for them to struggle through life.

  6. It is pretty obvious that if Toyota’s big leap forward profit-wise comes from “repatriated profits” then it must be a better deal for them to make cars at home, export them and repatriate the profits.
    GM pulled out of Germany as well. It is a corporate decision to bring car making back home. Perhaps they are trying to boost the economy of the US?
    Ford did themselves out of business in Australia. They received substantial funding from Government but failed to invest it in improving their production line, making small cars and looking at new technologies such as electric vehicles.
    The Industry plans for half a century at least have been about building big Aussie sedans and wagons. When we demanded smaller cars we mainly got imports from GM and Ford. That wasn’t clever.
    We import cars and bikes from at least a dozen countries. Some of these brands have eight or more models, which in turn can have four or five variants. They are servicing a market of about 15 million vehicles and not everybody swaps their car for a new one each year. What economy of scale?

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