Peter Gallagher

Remem­ber the glee with which he com­mit­ted $6 bil­lion of our money to res­cue the moan­ing motor-vehicle multi-nationals from their mar­ket­ing errors, just ahead of the ‘GFC’? Since the Rudd-Carr plan for motor vehi­cle sub­si­dies was announced, the sector’s exports have tum­bled fur­ther than all oth­ers.

“Once we con­trol for [price defla­tion], 56% of the real drop in exports is in motor vehi­cles and cap­i­tal goods. Raw mate­ri­als rep­re­sent another 24% of the drop.” Fran­cois and Woerz

But the trade-plunge was not the cause of the car mak­ers’ recent woes. The dra­matic fall in ship­ments came after peo­ple stopped buy­ing their over-priced, over­sup­plied vehicles.

“The drop in motor vehi­cle trade actu­ally lags the cor­re­spond­ing drop in US pro­duc­tion. Accord­ing to the BEA, domes­tic pro­duc­tion of cars was down 60% from Feb­ru­ary 2008 to Feb­ru­ary 2009. Over the same period, real exports fell “only” 45%, which is slightly bet­ter than the 47% drop from Jan­u­ary 2008 to Jan­u­ary 2009.” Fran­cois and Woerz

The les­son for Carr? Gov­ern­ments have no busi­ness pick­ing indus­trial strate­gies on the basis of dog­matic ‘grand visions’ and advice from mates. All too often it’s the mar­ket­ing strat­egy that has failed and no amount of pub­lic money will rem­edy that.