Holden Down But Australia’s Automotive Sector is Alive and Well

Holden Down But Australia’s Automotive Sector is Alive and Well

Many, many years ago, barely off my P Plates (and still pretty green in the finance game), I worked as a finance broker in a truck yard.

Given I have a thing for wheels, swear words, and heavy machinery, it was a good fit.

As result, I can tell you many useless facts about trucks.

Like how a Mac truck with a gold bulldog on the front has a genuine mac engine, but if it has a silver bulldog, the engine is another brand like Ford or Cummins engine, for example.

There’s plenty of stories that come from what was the final frontier of PC culture. Few are printable.

There was the time I drove a heavy rigid truck from the docks back to the office because they were short drivers, or the pathetic attempt of me trying to use two feet to get the clutch in on a Kenworth.

After talking with salt of the earth folks, tired drivers coming off a six-week run, smoking at your desk (even in 2002), the odd chair being thrown and a knife fight, my greatest takeaway from these years is that I understand how important trucking is to the Aussie economy

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Without trucks Australia stops

There is nothing more frightening than overtaking a four-trailer road train on a shitty outback road, in a four-wheel drive not really designed to go much faster than 90.

Yet there I was on a road trip with the old man, some 70 clicks south of Longreach, hooting my dad’s Patrol up to 130 kilometres an hour to get past this freaking long truck.

Anyone who’s travelled up and down outback roads, will tell you they are more like a slither of bitumen, with nothing but dust on either side.

The roads are barely made for two cars to travel side by side, let alone to overtake a 100-tonne truck the length of an Olympic swimming pool.

While the back of that empty fourth trailer snaked and danced all over the road as I moved out to overtake the thing, I saw the sign that’s on the majority of Aussie trucks: ‘Without Trucks Australia Stops’.

That’s true.

A few years ago The Australian called trucks ‘the economy enablers. These mega machines move around five million tonnes of freight a day. Without that, there’d be squat to buy at the shops.

According to the article, there are roughly 4,000 heavy trucks that run on the Hume Highway between Melbourne and Sydney every day. And another 3,600 that drive between Sydney and Brisbane.

And notice I said heavy trucks. They’re your rigid bodies and two-trailer combinations they’re counting. Those figures don’t include the smaller ones that can be driven on an ordinary licence.

Depending on the health of the Aussie economy, road freight carries anywhere from 180 to 200 billion tonnes of goods a year.

 

In total the road freight industry alone is estimated to be worth about $47 billion to Australia.

 

The thing is, the total value of this industry is much harder to put a price on, because it’s made of so many parts…

Think Big – Our Auto Industry is Alive

There’s been a lot of hand-wringing in the press about the demise of the Holden brand last week.

But all those headlines have missed a crucial point.

Sure, we no longer mass manufacture passenger cars here.

Yet our automotive industry is still thriving…you just have to think bigger.

The ABC pointed this out over the weekend, that the biggest component of automotive manufacturing in Australia is alive and well, writing:

Australia’s auto sector is still expected to generate more than $3.2 billion in revenue in 2023 – 24, with 301 business employing almost 4,400 people.

That may leave you wondering, “What’s left?”

The biggest part of the answer is trucks and buses, which respectively make up 54 and 14 per cent of the remaining auto industry in Australia.’

They then add that the Volvo factory is producing 3,000 trucks a year. And will spend about $25 million so the plant can make 4,000 trucks annually.

Down south there’s PACCAR in Bayswater and Iveco in Dandenong.

These three brands alone bring in almost $2 billion in annual revenue.

More to the point, each of the manufacturers has an inbuilt protection that our car makers of yesterday would long for.

And that is our unique requirement of trucks.

Australia has the longest trucks in the world. They’re required to regularly carry loads that far exceed their international counterparts. Plus those 100-tonne-plus loads are often over thousands of kilometres, in one trip.

Not only that, our roads are fairly ordinary, so our trucks are lower to the ground.

Oh, and in many, many remote parts of the county, some truck engines (like Kenworth for example) are designed to run for 24 hours for days and weeks at a time…

But given that these road beasts start at around a quarter of a mil — and some very heavy haulage ones can top out at almost a million — they aren’t replaced very often.

Meaning a burnt-out engine and transmission will be repaired rather than replaced. That alone can cost 20 grand. It happens frequently too. So frequently that back in the days of easy credit, banks wouldn’t blink at offering a 12-month loan for an engine rebuild.

Having walked the enormous sheds of a truck service depot for years, there would be four engines slung from the roof at any time.

Repair and restore is at the core of keeping Aussie trucks running.

It’s an enormously important industry that employs a few hundred thousand Aussies across the country.

Australia’s automotive sector is alive and well.

Not only that, it’s a sector of the Aussie economy that is actively pursuing technology advances.

Savvy investors should watch the trends coming out of this sector.

I’ll show you what I mean on Wednesday.

Until next time,

Shae Russell Signature

Shae Russell,
Editor, The Daily Reckoning Australia

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