In an unprecedented move, a federal parliamentary committee has recommended that Australia’s large wholesale fleet of automotive parts be shut down and replaced by a single supplier.
The Federal Productivity Commission has recommended a wholesale network of six suppliers to be established as part of the “big three” suppliers: Bosch, Kuka and Gildan, which have long been considered the key players in Australia’s automotive industry.
Key points:The committee has said the new supplier system would be “cost-effective and sustainable”The committee recommended the wholesale network would be a “cost of keeping” and “a cost of keeping to keep the vehicles that are manufactured.”
Key pointsThe committee said the wholesale suppliers would be required to meet “specific performance targets” to be eligible for a “major investment”The system would “serve as a cost of maintaining” the fleetThe committee also recommended a single supply chain for parts would be created to meet the needs of the industry, with suppliers not needing to “compete” with each other.
The new system, which would be the “cost to keep” for the wholesale fleet, will also be designed to “serify existing supply chains and be able to replace existing supply chain partners in a timely manner,” the committee’s interim report said.
“It will also provide for a cost to maintain of the supply chain as a whole,” the report said, adding the system would meet “the specific performance targets to be the largest supplier in the market”.
“This will provide a cost-effective system for the industry.”
Bosch has been the “largest automotive supplier in Australia” for decades, with over 500,000 vehicles built.
The committee noted that the wholesale industry is “struggling to keep up with the cost of living”.
“The current system of the three major suppliers is too costly and not sustainable,” the interim report noted.
“We believe the wholesale system would provide a cheaper and more cost-efficient system.”
“It would be cost-saving and sustainable in the long term.”
Gildan is Australia’s largest automotive supplier, with nearly 4.5 million vehicles manufactured.
Kuka is Australia of the biggest car parts supplier, supplying over 5 million vehicles.
The Government’s new system is expected to be unveiled in the first half of next year.
The panel recommended a one-year transition period should be “sufficiently prolonged” to allow for the replacement of existing suppliers.
“The cost of the wholesale supply chain would be assessed to provide an appropriate net return for the Government for this period, in line with its cost-benefit analysis,” the panel’s report said of the transition period.
“During this period it is anticipated that the Government would use the wholesale distribution network as a base for a significant reduction in the costs of the current supply chain.”
The committee had recommended that “at least” $400 million in federal government funding be allocated to support the wholesale and major suppliers in the supply of automotive components.
“If a decision is made to close the entire supply chain, it is recommended that an interim period of 1-2 years should be sufficient to provide the necessary financial support for the entire system,” the review concluded.
“Further review of the system may be necessary to consider the viability of this approach.”