Reviewed vehicle plan awaited

Press, 15 August 1984, Page 36

Reviewed vehicle plan awaited

By

MARTIN FREETH

Vehicle assemblers are waiting for the Labour Government to remove question marks over the development plan for their industry intended to start next month. The Minister of Trade and Industry, Mr Caygill, has indicated he is reviewing the plan announced by the previous Government in June.

Mr Caygill wants to still meet the September 1 start date for the plan but says this will be postponed if necessaiy. He has reportedly invited sector groups in the industry to make new submissions.

The president of the Motor Vehicle Manufacturers Association, Mr Denford McDonald, said this week he was pleased with Labour’s willingness to review the plan but was not prepared to discuss publicly at this stage the changes assemblers would like to see.

The National Government’s list of decisions, based on the work of the Industries Development Commission, has had general acceptance from assemblers.

“There’s no question the industry wants guidelines to work with in future and the sooner the better,” Mr McDonald said.

The plan, like those in other sectors, studied by the IDC, is intended to boost efficiency throughout the vehicle industry, including assemblers, component manufacturers and dealers, by exposing it to increasing competition from imported vehicles and componentry. The plan would raise the import licence allocation for completely built up cars and light commercial vehicles progressively over a four year test period from 10 per, cent of the total' produced domestically to 25 per cent. Tariffs on these vehicles over that period would remain at the existing level.

To help the assemblers meet the new competition, the tariff on imported vehicle packs (completely knocked down) would be reduced from 45 per cent to 15 per cent over the test

years. Imports from Australia and Britain would be subject to no tariff at the end of the period. The vehicle packs would be exempt from licensing.

Executives at three of New Zealand’s assembly companies say they can accept the challenges implied by the existing plan and welcome some set Government policy towards the industry. NZMC’s general manager, Mr B. S. Carson, said the plan suited his company with its dual source of supply from Japan and Britain.

Mr Carson foresaw no need for reduced assembly levels over the four year trial period. He predicted other assemblers would make cuts in their small runs of light commercial vehicles , and these would be imported built up instead. NZMC was interested in the sales tax likely to be imposed to recover revenue forgone on CKD units. Mr Carson suggested vehicles imported CBU would remain comparatively more expensive than locallyassembled vehicles than at present.

Ford Motor Company’s public affairs manager, Mr R. G. Scoular, pointed to two issues which had to be addressed now by the Labour Government.

The impact of greater competition on employment and the level of use of existing plant was one, and the relationship between the New Zealand and Australian vehicle industries was the other.

To this point, the relationship in the context of closer economic relations had not been fully considered. “We have long held the belief that the motor industry plan must be incorporated in

CER,” Mr Scoular said.

He suggested CER meant opportunities for both the assembly and component manufacturers in New Zealand.

. Mr Scoular said Ford too expected a softening of the market later in the year, the impact of which would vary from model to mbdel. He pointed to other economic factors in the next two months which could influence the industry’s im--mediate prospects. These were the Budget and; Labour’s economic summit conference. The new car market is recognised as being particularly sensitive to shifts in the country’s economic mood.

New car sales have been rising steadily this year with new registrations in the first six months at 45,278, compared with 37,520 for the same period last year. The lifting of hire purchase restrictions on vehicle purchases last September has been one factor directly contributing to the rise.

The Prime Minister, Mr Lange, indicated that the industry plan would be one subject for discussion with the Australian Prime Minister, Mr Hawke, when the pair met in Papua New Guinea last week.

Meanwhile, the industry is waiting for a fall-off in new car demand when higher prices resulting from devaluation hit the market, although it is not expected to rival the slump in sales in late 1982 which led to pools of new cars building up at assembly plants and some worker lay-offs. Mr Carson, who said there had been a “mad scramble” for cars since the first word of devaluation before the election, suggested prices would rise 12 to 15 per cent at some point before the end of the year. He did not expect any lay-offs when the demand fell and said a decline had been one contingency built into the company’s planning.