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Ford pulls out of Australia

Bob Graziano Sky News 220513Bob Graziano: “Manufacturing in Australia is no longer viable”

Breaking news: In a press conference that started 30 minutes ago, Ford Australia President and CEO Bob Graziano has announced that Ford is pulling out of manufacturing cars in Australia in October 2016. Graziano has confirmed local production of the Falcon, Falcon ute and Territory will continue until then, but these are models that are almost solely sold in Australia so the volumes will be low.

Why do I write about this now? Simply because Ford had been a huge part of the automotive culture in the country, manufacturing cars in Australia since 1925 when it assembled the legendary Model T. Ford is considered an Australian brand here, in the same way it is considered an English brand in the UK. So this event is similar to Volkswagen announcing they stop manufacturing in Germany, Ford pulling out of the US or Renault giving up producing cars in France…

Ford Falcon 1960. Picture courtesy of poptartmagazineFirst generation 1960 Ford Falcon

This announcement comes as most global manufacturers are adding hundreds of thousands of production capacity in China, as I detailed in my “China: Return to explosive growth predicted” article yesterday. Among them, Ford will be doubling its production capacity there by 2015 to reach 1.2 million annual units.

The main two reasons for this pull out are market fragmentation and production costs. If you are a regular reader of BestSellingCarsBlog, this would not come as a surprise. Ford’s traditional local best-seller the Falcon has seen its sales drop by 81% over the last decade, going from 73,220 units in 2003 (#2) to just 14,036 in 2012 (#21) and hitting a lowest-ever 717 units in April, which placed it outside the Top 30 most popular models in the country.

Ford Falcon 2008. Picture courtesy of themotorreport.com.auFord Falcon (current generation)

BSCB Australia Top 5 2002 2012Ford Falcon sales in blue. Graph by Josh Gregg, click for larger version.

Bob Graziano announced that the Falcon nameplate will be retired when production ceases in October 2016, putting an end to 56 years of activity in what was the longest-running nameplate in Australia and one of the longest ones in the world. As a brand, Ford had been on the Australian podium for the best part of the last 90 years, but is down to #6 year-to-date in 2013, below Toyota, Mazda, Holden, Hyundai and Nissan.

More details below.

Ford Model T Australia. Picture through FlickrAustralian Ford Model T

Bob Graziano said it costs twice as much to manufacture cars in Australia as it does in Europe and 4 times as much as in Asia.

That General Motors (with the Holden brand), Ford and Toyota were all still manufacturing in Australia was a little bit of an anomaly in the current car world. Locally produced cars sell in less and less volumes year after year, and export markets have also thawed down. Ford is currently only producing 40,000 units a year in Australia, which is going down towards 30,000 and this simply doesn’t provide the necessary economies of scale for the brand to stay competitive. As a comparison, the only two remaining local manufacturers, Toyota and Holden, both produce a little bit over 90,000 annual units locally.

Source: Ford, Sky News.

This Post Has 13 Comments
  1. @Ian
    Agree. Ford is going a difficult way at the moment due to negative tendencys in a couple of markets. There seems to be a compensation because of strong growth in China, but in Europe and Australia the situation is complicated. This is the way how economy works out.

  2. @Todor
    Aahh. So the key word here is has. Agreed Ford has sold more than any other brand. That was then, but this is now. Since 2008 Ford has taken a back seat to many other manufacturers world wide. Don’t get me wrong I have quite a soft spot for the blue oval and would definitely skip the Toyota and GM dealerships on my way to the local Ford guys if I need to replace my current ride. As Ford and Mazda are selling from the same dealership locally it won’t however be a Ford replacing my MX-5 but another one of those…

  3. @Ian
    I concur with that.

    Given Ford’s European business on-going cash haemorrhage, how long before they shut Saarlouis or heaven forbid, Cologne. Engines aside, we all thought Dagenham was sacred!

    Nissan UK has been an outstanding example of how to get it right in Europe. The 2012 figures of 550k units built, surpassed the combined Italian auto-industry output for 2012!

  4. Ford hit a major milestone today, and built its 350 millionth car since the company was founded in 1903. Even though Ford was founded in southeast Michigan, the milestone car was not built on home turf — it was a Ford Focus assembled in Rayong, Thailand.

    Ford says that building 350 million cars over the course of 109 years is equivalent to building 8797 cars per day, or an average of one new car every ten seconds. If all those vehicles were arranged end-to-end, Ford says the 350 million cars would stretch from to the moon and back, a distance of approximately 470,000 miles.

    It goes without saying that Ford has previously celebrated milestones when it built certain numbers of cars. The company’s one millionth car was a 1915 Model T, the ten millionth was a 1924 Model T, and the 50 millionth was a 1959 Ford Galaxie. By 1978, a Ford Fairmont Futura marked Ford’s 100 millionth car, a 1979 Mustang coupe was the 150 millionth, and a 2004 Mustang convertible was the company’s 300 millionth vehicle.

    Read more: http://wot.motortrend.com/major-milestone-ford-assembles-350-millionth-car-since-1903-255115.html#ixzz2UDLCkBiH

  5. Josh :
    @Todor
    Best selling brand? Last time I checked Ford were trumped by Toyota, GM, VW, and Hyundai. Even if one looks at a single brand Toyota is surely selling more than Ford world wide

    Ford has sold 350 000 000 vehicles and is the best selling brand of all times. There is no other auto brand who has more sales than Ford. Toyota has about 150 000 000 and Volkswagen even less. GM is not a brand, but a corporation of many brands.

  6. Sad indeed, Ford will lose sales worldwide by not manufacturing locally, Australia is the latest, not so long ago they announced they were closing their plant in Belgium, with the loss of 4,300 jobs and here in the UK they have closed their last vehicle manufacturing plant, which means for the first time in a hundred years no Ford vehicles are made here ( a huge number of engines are), many people here still think of Ford as British, in fact Nissan, Toyota and Honda are much more British, they manufacture here, last year Nissan produced about 550,000 vehicles at their Sunderland plant. Ford have lost market share here so far this year (they are lucky that the British market is at the moment enjoying a sales boom, will it last), the UK in case they hadn’t realised is their biggest European market, the new Mondeo is not due here until next year, Ford I am sure will have serious problems in Australia as they already have in Europe, the Koreans are already here, will it be the Chinese next. Sorry went on too long.

  7. @Todor
    Best selling brand? Last time I checked Ford were trumped by Toyota, GM, VW, and Hyundai. Even if one looks at a single brand Toyota is surely selling more than Ford world wide

  8. Holden, Ford, Toyota are manufacturing some models in Australia.

    Kia, Hyundai, Mazda, Mitsubishi, Nissan, Chery, Great Wall… does not produce anything in Australia!!!

    By the way, Chinese automakers are ilegal copying foreign cars.. for example Chery QQ = ilegal copy Daewoo/Chevrolet Matiz, Great Wall Peri = ilegal copy of European Fiat Panda.

    The problem is…Australia has very low import duty. Conversely, countries that are imported cars into Australia have very high duties – China, Japan (tax), India, Korea (foreclosed)…

  9. As a Ford fan I think this is a very sad news. The success of Ford has always been, because Ford was always considered as a local brand – in USA, Australia, England, Germany, Belgium, Turkey and so on. There was different models for different markets, according to requirements of particular customers and now with the new global strategy Ford closes factories and looses positions like delay of the new generation of Mondeo.

    Ford is the best selling brand in the world with over 350 000 000 sales, but this great company may be at the beginning of its end! :(((((((((((((

  10. Hopefully the blue oval will not disappear completely but will be represented by “imports” such as the Fiesta and Focus?

  11. @rocketman
    I agree Rocketman it’s a sad day.
    Looks like the Ford vs. Holden battles will progressively be replaced by Toyota vs. Mazda…
    At this stage Ford continues in the V8 Supercars, Bob Graziano was asked a few questions about it today but did not say Ford was pulling out of V8 (yet).

  12. Very sad day indeed Australia!

    What is Oz without the Ford vs. Holden battles?

    What will happen the the V8 Supercars series?

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