In early 2024, critical decisions will be made which will decide which car brands will live and which may die in the Australian market - and it will all depend on how hard the federal government is prepared to wield the cudgel of fuel efficiency.
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If the lever is yanked hard to the left, then popular brands like Ford, Mazda and Honda face enormous pressure on their business models because they sell very few hybrid models and even fewer zero emission cars. Ford, in particular, appears to be particularly vulnerable.
And big question marks will also hang over the medium-future of diesel-powered twin cab utes that Aussies buy in their tens of thousands every year. Their big sales volumes and high tailpipe emissions will place them squarely in the target sights of tougher standards.
All such decisions would have huge political knock-on consequences. Farmers, miners, tradies and agricultural industries would all be affected.
The shift toward cleaner fuel has begun; in 12 months, Australia will advance one step forward on tougher exhaust emissions. Petrol containing less sulphur content and less nasty aromatics will begin to flow into the market in 2025.
That change means more of the clean-burning, low emission engines from Europe will be compatible with our fuel.
But the much more difficult task is just ahead.
Bend or push
Industry observers will be watching closely to see whether the federal government is willing to bend to the wishes of the car companies and push out a timetable of tougher regulation for up to a decade, or bite the bullet, push hard and quickstep to catch up to the rest of the developed world.
Australia's transport sector accounted for 19 per cent of greenhouse gas emissions in 2021. That same year, the national vehicle fleet was just over 20 million cars, with around one million new vehicles added every year.
Australia remains one of the few major economies in the world without mandatory standards for fuel efficiency. Even the so-called "voluntary" standards which the car industry lobby introduced in 2020 are 32 per cent behind the markers of other developed countries. It just won't wash.
It's been 12 long years since the federal transport discussion paper on CO2 standards for light vehicles was published. Yet another discussion paper was published in 2016. In June 2020, the National Transport Commission government advisory body rolled out a report on carbon dioxide emissions intensity of light vehicles.
But under the former Liberal-National government, the discussion effectively stalled. Failing to make the tough decisions means the rest of the world has accelerated away while the big end of town has trousered lots of profit.
Decision time
The promise has been made to act.
Australia has a net 2030 emissions target of a 43 per cent reduction below 2005 levels. Given the transport sector's huge contribution to the issue, decisive action has to happen on reducing exhaust emission standards, and quickly.
Special interest groups and lobbyists are intent on yanking the discussion every which-way. Regardless of the solution chosen, it certainly won't please everyone.
Union heavyweights like the Australian Manufacturing Workers Union want to separate out heavy vehicle emissions from light vehicles and provide a cushion of support against a too-fast transition to protect jobs and investment.
By far the biggest influencer brand and the loudest voice in the industry is Toyota, which chairs the federal car industry lobby group and also commands around 19 per cent of Australia's new vehicle sales.
It wants a lengthy 10-year transition period because it has committed heavily to hybrids, not zero-emission EVs. If a future Australian emission plan is biased heavily in favour of fast-accelerating EV sales, it risks losing sales and market share.
Market split
Toyota says that to transition too quickly will cause "market disruption". It wants a standard that is a "stretch" but is "achievable", with a "cautious start " but which "finishes strong".
And yet other car brands, like the low-volume EV-only Polestar, say going slow "isn't an option".
"Government cannot rely on domestically developed solutions to address our vehicle emissions challenges. Consequently, the regulatory framework bears a greater responsibility in establishing strong signals for both car manufacturers and consumers," Polestar said in its submission.
At all costs, the legacy car companies - Toyota, Mazda, Ford and the like - want to avoid too much change to the "business as usual" model.
Too much disruption, such as the European market experienced in 2021 when light commercial sales fell by 18 per cent, would be very bad for business. That fiscal pain would also flow down to the dealership level. Country dealers which employ local staff and apprentices would be squeezed heavily, which then plays out at a political level.
Behind the carefully framed words of the car industry is the veiled threat is that with a fast acceleration to tougher standards, consumers will be the ones penalised. While that's not strictly true, it's a strong hand to play.
A further consequence of market uncertainty will mean consumers will hang onto their current cars for longer which, conversely, would generate additional income for the vehicle service and repair industry.
With so many politically-charged permutations to consider, it's little wonder the holding pattern of regulation has continued on for so long.