Sydney, 4 June 2014- When Toyota announced in February they would be closing their manufacturing plants in Australia in 2017, they joined Holden and Ford who had made earlier announcements their car manufacturing would be going offshore.
CBRE Australia’s most recent Viewpoint identifies that these closures will not only impact the motor vehicle industry, but will also have a flow-on impact to industrial markets and suppliers to the motor vehicle industry. Research Manager Mark Lafferty said that while this impact is likely to be negative in the short term, the growth in the transport and logistics sector in the long term has the potential to ensure the industrial sector in Australia continues to grow.
CBRE Research Manager Mark Lafferty found that whilst the closure of Toyota, Holden and Ford may mean the end of car manufacturing in Australia, after analysing the trend over the last 10 years, it is evident that the market has already absorbed a significant decrease in production over this period.
“We
can see from the chart that production has already decreased by 48% from 2003
to 2013,” Mr. Lafferty Said
“However, while production has decreased, over the same period the amount of motor vehicles purchased has increased by 22%. Significantly, of the 900,000 vehicles registered in 2013, only 13% (118,510) were made in Australia. In other words, Australians acquired 87% (781,490) imported vehicles last year and there is still very much an appetite for new motor vehicles in the market.”
Throughout Australia, the major contribution to growth in Industrial has been the transport and storage sector rather than manufacturing. Outputs in the manufacturing sector since 2000 have only grown from $25b to $26b, compared to the transport and storage sector’s growth from $14b to $18b over the same time period.
“The decline in the overall manufacturing sector mirrors the decline in motor vehicle manufacturing, emphasising the point that this is not a new phenomenon in the Australian market, and is one that has been occurring over a prolonged period of time.”
Over 5 million sqm of industrial land will become available in Victoria and South Australia between 2016 - 2017, following the closure of direct manufacturing plants and a decrease in space required by indirect suppliers. Despite the large land availability, strong demand will continue for new vehicles in Australia, and the space previously used for manufacturing is likely to be adapted to cater for storage of imported motor vehicles. This will have a knock-on effect in creating greater demand for transport, storage and logistics providers, as the stored vehicles will need to be distributed to retailers.
CBRE’s Viewpoint highlights that the growth in the transport and storage sector will not only absorb the available land, but will also grow the required space for the industrial sector. It puts the net increase in space requirements over the next 10 years at 6,400,000sqm.
“Whilst the closures will potentially result in issues in the short term
due to space availability and a further decline in manufacturing, the growth in
the transport and storage sector will not only absorb the space which will come
on line, but is also expected to continue to drive growth in the industrial
sector over the next 10 years,” Mr Lafferty concluded.
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