European Union 2015 Study Tour Final Report Submission - Nuwan Ranasinghe 4927788

SWINBURNE UNIVERSITY OF TECHNOLOGY

Business In The European Union Study Tour 2015

Final Report

Nuwan Ranasinghe 4927788

Submitted 26th January 2016

The contents of this report are in response to the Final Report topic “Keys to Success: a comparative study of the histories of the German and Australian car manufacturing industries.” The report aims to not only analyse and compare the origins of both automobile industries but will also explore as to how both countries’ car manufacturing histories have assisted in various other factors to impact their respective nations industrially and economically. This report attempts to gain a deeper understanding as to how their unique histories have assisted in the creation of successful car designs in Germany and Australia, as well as discussing how both nations can maintain their manufacturing successfully into the future. The conclusion of this report does suggest that Germany’s car manufacturing is to be more powerful than Australia’s due to their rich history of high class automobile production, but this is only after thorough comparative analysis. All information references have been included.

European Union Study Tour 2015 Final Report Nuwan Ranasinghe 4927788

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Table of Contents

Introduction…………………………………………………………………………….2

A Brief History of German and Australian Car Manufacturing…....3

Origins of Automotive Design in Germany and Australia…………….6

Conclusion…………………………………………………………………………………8

References…………………………………………………………………………………9


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Introduction

Car manufacturing has no doubt been a major contributor in creating the iconic reputation

that Germany has as being one of the world’s best in producing high-quality luxury and

performance vehicles. From the humble beginnings of their major brands to where they

stand now, Germany is without question a powerhouse when it comes to developing the

best in automotive technology. As stated on GlobalCarBrands (2014) ‘[with] an annual

output of 6 million, German cars are some of the most innovative vehicles in the world’ thus

truly exemplifying the raw power and high class quality of cars manufactured produced in

this part of world. Germans have become famous for producing top quality individualised

cars, as suggested by Pfieffer and Wieland (pg. 128, 2012) ‘quality improvements of cars,

particularly the trend towards individual cars on demand, have led to an increased variety of

parts.’ This versatility in German car manufacturing makes it a real game changer in the

competition with other brands around the world, and it certainly supports the claim that

they are truly ‘famous worldwide for building quality and luxury automobiles’ (Daily News

Dig, 2014).

Australian car manufacturing in stark contrast has not received the same prestigious

reputation that the German car manufacturers have revelled in for over a hundred years

however they have still achieved relative fame and popularity with some of their more

home-grown models. One prime example of this is the classic VB Commodore ‘a four door

sedan [was] introduced in 1978, with a station wagon version briefly available in 1979’

(GlobalCarBrands 2014). As backed up by this article, the VB Commodore was certainly a

successful Australian car, ‘with sales of nearly 96,000, it became Australia’s top selling car in

1979’ (GlobalCarBrands 2014). Australia continued to produce more diversified models of

existing brands and they even created some of their own brands, such as ‘Mini, Leyland,

Chrysler, Nissan, Valiant, [and] Renault that achieved a number of 450,000 cars overall’

(GlobalCarBrands 2014). Despite this though, Australian car manufacturing, unlike

Germany’s, is unfortunately on the decline, with many jobs and resources being shipped

overseas or delivered off shore. According to the Australian Government Department of

Industry, Innovation and Science, ‘the three passenger motor vehicle producers Ford,

Holden and Toyota have each announced they will cease manufacturing in Australia over

the coming years’ (Industy Sectors – Closure of the motor vehicle producers , 2014) with

‘Ford cease[ing] manufacturing in October 2016 while Holden and Toyota will cease at the

end of 2017’ (Industy Sectors – Closure of the motor vehicle producers, 2014). As can be

witnessed, Australia’s three main companies face serious job cuts and a severe

manufacturing decline, putting that sector at a serious production deficiency.

Nonetheless, the purpose of this report is to go into further detail behind the histories of car

manufacturing within Australia and Germany. A comparative analysis will be then done


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outlining the unique automotive designs of each country, followed by an exploration of the

economic and manufacturing successes in each nation. Towards the end this report we will

investigate the impact and effects that German and Australian car companies have had on

their respective economies followed by an outline of what each country has in store to

sustain their continued success for the future. A conclusion has been supplied summarising

the content discussed in this report which is an overall comparative analysis of German and

Australian car manufacturing histories.

A Brief History of German and Australian

Car Manufacturing

As discussed earlier, Germany has enjoyed a fine tradition of automotive engineering excellence, which dates back to 1885, when Karl Benz developed the world’s first combustion engine motorcar, the Motorwagon (Automostory 2014). Digressing deep into Germany’s automotive manufacturing history will provide us with an excessively lengthy dialogue on this section alone, as each of the major car companies from this region of the world possess their own illustrious histories on how they came to be. This report instead will focus on the key events that shaped the majority of these car companies’ key successes to become the premier competitors in the automotive industry today. Following Benz’s production of the Motorwagon, he developed and patented the first four-stroke internal combustion engine in 1886, followed by a more advanced model which ran on gasoline and entered commercial production in 1887 (Automostory 2014). Benz’s early inventions soon inspired more of the now prestigious car companies to emerge in Germany, with Opel producing their first car in 1906, and soon became the first company to set up a mass production assembly line (Automostory 2014). In 1935, Opel was the first German car manufacturer to produce 100,000 cars in a year (Automostory 2014). BMW entered the German automobile movement in the 1920s with their first motorised bicycle, the Flink (BMW Drives, 2012). Powered by a Kurier two stroke engine, it proved to be a catalyst in encouraging the Bayerische Motoren Werke AG (BMW Drives, 2012) to enter the growing German car market. The first BMW car was the Dixi 3/15, constructed in 1928 and featured a strong 743cc four-cylinder engine capable of producing 15 horsepower. From here it gave rise to the reputation BMW have today as being ‘among the costliest car brands in the world’ (Automostory 2014) as they own assets with Rolls Royce and sub-brands of Mini in today’s market (Automostory 2014). Perhaps one of the most significant car brands which played a substantial role in the propulsion of Germany’s car manufacturing industry after World War II was Porsche. Specialising in sports cars, racing and high performance automobiles, Ferdinand Porsche’s dream was to create a high performance car that would be affordable for the average


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individual. As suggested by this excerpt ‘The Porsche name has become synonymous with sports cars and racecars because that is what company founders Ferdinand Porsche and his son set out to build when they first set up shop with 200 workers in 1948’ (Porsche AG Historical Background 1948-2007, 2012) thus showing just how important they were in thrusting German car manufacturing into the racing and high-performance sports car scene. This is supported by further evidence, as according to press.porsche.com, the company is seen to be ‘synonymous with racing, and Porsche cars began competing almost immediately’ (Porsche AG Historical Background 1948-2007, 2012). Currently, Porsche cars have won almost 24,000 auto races and boast a tally of up to 50 class wins in the Le Mans circuit (Porsche AG Historical Background 1948-2007, 2012). As can be concluded from this truncated summary, Germany’s history of car manufacturing is a long and proud venture featuring extensive feats of engineering ingenuity to assist with producing only the best in automobile manufacturing. As suggested by this excerpt from BBC Business ‘cars had become the ultimate metaphor for Germany’s extraordinary industrial revival – and for the collapse of Britain’s manufacturing industry’ (How German Cars Beat British Motors – and kept going, 2013). BBC Business identifies the Volkswagon Golf as a major threat to the British automobile industry, hailing it as ‘one of the bestselling cars of all time’ (How German Cars Beat British Motors – and kept going, 2013). Today, Germany is the fourth largest producer of luxury cars in the world, and is considered an icon of Europe’s industrial revolution. As BBC Business fittingly implies, ‘German manufacturing is one of the great success stories of the post war age’ and that ‘If you want to know why Angela Merkel calls the shots in Europe, Germany’s car factories are a pretty good place to start’ (How German Cars Beat British Motors – and kept going, 2013). Australia’s history of car manufacturing has not been as illustrious or as success ridden as Germany’s however the country was still able to maintain a relatively sustainable industry of automobile production from the cusp of World War I up until the early to mid-2000s. Most Australian cars that have been manufactured have been derived from foreign companies that decided to invest in production factories in Australia. Sadly, Australia’s current car manufacturing industry is on a severe decline, with an article on SBS News declaring that ‘The Australian vehicle-building industry would, clearly, never stand on its own four wheels’ (Australian car making doomed from start, 2014) and that ‘Failures have been more common than successes in the local car industry’ (Australian car making doomed from start, 2014). Despite such negative sentiment towards their car manufacturing industry of late Australia can still lay claim to producing some of the most successful automobiles that are still being made today, primarily from one of their oldest car companies Holden, which began in 1856 in South Australia. With the VB Commodore being one of the most successful cars produced in the region, it is no doubt that the creation of the Holden car brand ‘occupies a special place in the hearts of many Australians’ (The Holden car in Australia, 2007). The development of the Holden car brand was pivotal in jump starting Australia’s entrance into the industrial revolution and they would go on to produce a whole line of vehicles that became iconic of embodying all that was important to the Australian way of life.


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Although the Holden car company began in South Australia by 1924 they had become the exclusive supplier of American car manufacturer General Motors, and supplied tramcars for Melbourne city throughout the 1920s (Timeline: Holden’s History in Australia, 2014). By 1948, Holden unveiled their first ever all-Australian motor vehicle, the 48-215, affectionately known as the ‘FX.’ A compact and economical family sedan, its robust shape was suited for the Australian environment (Timeline: Holden’s History in Australia 2014) and proved to be a significant achievement in helping Australia make a mark in the car manufacturing world. According to ABC News ‘the car was an immediate success and Holden could not satisfy demand quickly enough’ (Timeline: Holden’s History in Australia 2014) thus showing just how important the development of this vehicle was to the Australian people. It signalled Australia’s arrival into the mass production of motor vehicles. Today, Holden bases its headquarters in Port Melbourne, Victoria and is responsible for the designing and concept development of new vehicles. Holden is now a subsidiary of American motor company General Motors and owns assets with Chrysler, GMC, Cadillac and even Chevrolet (About Holden, 2015) enforcing it as a major brand in American and Australian car manufacturing. Holden really hit the limelight in 2013 with the production of the VF Commodore, hailed as ‘the most advanced car ever built in Australia’ (About Holden, 2015). Fitted with lightweight technology such as an aluminium frame and state of the art cutting edge driver safety and infotainment systems, the VF Commodore was Australia’s response to creating a top-class high performance vehicle capable of competing with its European counterparts (About Holden, 2015). The story of Holden’s rise as Australia’s first home-grown motor vehicle definitely brings immense pride to the history of car manufacturing of this young nation, but the same cannot be said for all other car companies that developed alongside it. Ford and Toyota were Holden’s only major competitors but by 2017 they will cease manufacturing in Australia as production is shipped offshore. According to SBS News ‘as traumatic as the closures of Ford, Holden and Toyota will be, it is something that has happened many times before’ (Australian car making doomed from start, 2014) perhaps outlining why Australia has not managed to sustain its car manufacturing as strongly as Germany’s has over the past 100 years.


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Origins of Automotive Design in Germany

and Australia

Analysing the automotive and the industrial engineering design of cars is perhaps the best

and most in-depth method in gaining a solid understanding of how various models, makes

and brands came to be. It gives us a chronological, systematic and logical approach into

examining how various engines, technologies and driver assist systems came to appear in

some of the cars we drive today, and are often reflective of the societies they were made

for. Some motorcar engine designs were inspired from manufacturing that were initially

made for other modes of transport, like BMW for example, who initially only made engines

and turbines for light aircraft and even Holden, who designed motors for tramcars in

suburban Melbourne before entering mass production of the FX. This section of the report

will take an in-depth yet brief analysis of the histories behind German and Australian

automotive design.

For Germans, the design of a car is everything. It creates an image, a status and produces a

symbol of prestige and class for that company. As German designer and publicist Bernd

Polster explains in his interview ‘the aesthetic design of a car has always been extremely

important’ (Goethe Institut, 2015) and that ‘the car is a status symbol and an integral part of

our way of life, or even our self. And to Germans, leading car brands have now become a

symbol of national identity’ (Goethe Institut, 2015). Such powerful and passionate words

clearly suggest that German automotive design is something is embraced with much pride

and zealous energy, and certainly indicates as to why Germany has been a leader in the car

manufacturing industry.

The first German cars did not actually concern themselves with design but more on

engineering functionality. As explained on Car Design News ‘Before 1910, design did not

play a major role in the vehicle development process. Engineering determined the

appearance of the first motor cars’ (Ihrig, R. 2004) showing that design and aesthetics were

something that was considered later on, once the car was manufactured to operate

smoothly. Karl Benz’s one-cylinder two stroke unit unveiled in 1879 (Daimer Company

History, 2016) is a classic example of this trend, and after achieving much success from his

humble design, Mercedes-Benz soon came into fruition with more advanced models being

produced soon after.

World War II saw Volkswagon enter the car manufacturing market when the highly sought

after design engineer Ferdinand Porsche was instructed by Adolf Hitler to develop and mass

produce the iconic VW Beetle, hailed as the ‘people’s car’ (Hawranek, 2009). With a smooth,

domed streamlined chassis coupled with a compact 1100cc H4 rear engine, the Beetle was


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the first German car to be ‘produced for the masses’ (Hawranek, 2009) and became a

symbol of the political power of the Nazi Party.

Today Germany has still retained its incredible reputation as being a leader in high class

automotive design. With issues like global warming and reducing carbon emissions taking

centre stage in the 21st century, designing cars that have a minimal impact on the

environment is paramount in upholding a positive image of the German car manufacturing

industry. According to Worldwatch Institute ‘Germany, the birthplace of Volkswagon,

Porsche and BMW, plans to become a global leader for developing low carbon vehicles’

(Worldwatch Institute, 2013) which is a positive sign if they are intent on producing

environmentally friendly cars for the future. Volkswagon’s all-electric concept car which is

to be premiered at the International Consumer Electronics Show in Las Vegas (Korosec,

2015) is a stepping stone in this direction.

Australia’s origins in automotive design in direct comparison to Germany’s has not achieved

that same passion and iconic status despite the country regularly producing outstanding

concept models and future car designs into numerous motor shows around the world.

According to Soumitri Varadarajan, a deputy dean of Industrial and Interior Design at RMIT

University, ‘Car manufacturing is a very very complex and really difficult industry to sustain

and maintain, and what unfortunately has happened in Australia over the past so many

decades we’ve embraced an open borders policy to vehicle imports’ (Stone, T. 2014). Such a

claim would suggest that Australia’s automotive design industry is becoming non-existent,

but according to an internet opinion article by Monash University ‘this Australian approach

to automotive design is characterised by a skill set that is more versatile than many

counterparts in other parts of the world’ (Coxon, S. 2015), showing that it is indeed in a

healthier state than previously thought. The article continues to speak positively of

Australian automotive design, claiming that ‘the contribution of Australians to the global

pool of car designers is satisfyingly high compared to other more populous nations in the

world, indicating that Australian design is as vibrant and innovative as ever’ (Coxon, S.

2015).

Despite such conflicting views regarding Australia’s place in the manufacturing and

automotive design of vehicles, the country still has a relatively outstanding history in

designing and producing high quality cars. Automotive design in Australia flourished

immensely after the conclusion of World War II, with the production of the FX, Holden’s first

Australian-made car that was made under The Project 2000 car design plan (History of Cars

2016).

Following the onset of European migration, car companies like Volkswagon, Renault,

Peugeot and Citroen began setting up dealerships and assembly plants in Australia, forcing

Holden to design a fresh new car for the public. In 1953, the Holden Business Sedan was


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released, with the FJ Holden close behind (History of Cars 2016). These two models helped

keep the Australian car manufacturing industry relatively sustainable for a period of time, as

it allowed ‘GM-H (General Motors-Holden) make its biggest profit since the start of the

company’ (History of Cars 2016).

The arrival of Toyota and Ford in Australian car manufacturing meant that Holden had a very

strong competitor in creating a fuel efficient car for the modern era, post 2000s. According

to History of Cars, ‘Toyota began building a hybrid version of the Camry’ (The Toyota Era,

2016) which received a $35 milllion backing from the Australian government. Holden would

soon face even stronger competition as ‘Toyota was not the only car manufacturers in

Australia dedicating time and money to fuel efficiency and environmentally friendly engines.

Ford invested $230 million in 2009 to focus on this’ (The Toyota Era, 2016). Despite such

aggressive intent from all major Australian car companies in investing in sustainable

automotive design, according to numerous sources the future is still unclear for Australian

car manufacturing as a whole. As stated on History of Cars ‘Technologies are advancing and

with the rising fuel price in Australia, the future looks uncertain for car manufacturers and

because of this, more hybrids and new power sources will be the future of the car industry’

(The Toyota Era, 2016). It shows that Australia certainly faces an uphill struggle if they wish

to compete with the likes of Germany and indeed the rest of Europe to maintain their

dwindling car manufacturing industry

Conclusion A comparison of the histories German and Australian car manufacturing shows that both

countries have unique and fascinating origins into how their automobile production came

into fruition, funded by differing motives. Germany has been the motherland and founder

nation of most of the world’s modern motorcar production, with Karl Benz’s inventing the

world’s combustion engine patented vehicle. Such a proud and illustrious history of

automobile engineering excellence makes Germany’s future in this field strong and vibrant,

with so many of today’s now iconic car brands originating or owning assets from there.

Australia’s history of car manufacturing has largely been one that has relied on the imports of others. Despite this, the Australian people had been yearning for years to have a car that was symbolic of their culture and history. The arrival of Holden and its development of the FX in 1948 followed by the VB Commodore in the 1970s proved to be the answer to a young nation looking for a car that was representative of their national identity. As the statistics show, these two models were by far one of the most successful cars ever to be produced in Australia. Now, with severe declines in production and continued job cuts, Australia’s car manufacturing industry faces an uncertain future, as more of their bigger brands continue to close down factories around the country. (Word Count: 3289)


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References

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January 2016, <https://www.globalcarsbrands.com/german-car-brands/>

GlobalCarsBrands, 2014, List and Logos of All Australian Car Brands, Global Cars Brands, viewed 20 January 2016, <https://www.globalcarsbrands.com/australian-car-brands/>

Daily News Dig, 2016, BMW History – Discover The German Car Manufacturers Origins And More, Daily News Dig, viewed 19 January 2016, <http://dailynewsdig.com/bmw-history-discover-the-german-car-manufacturers-origins-and-more/>

Pfeiffer, G & Wieland, B 1990, Telecommunications in Germany: An Economic Perspective, Springer-Verlag Berlin Heidelberg, Weinham-Sulzbach

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Car Brands Wiki, 2016, Brief Details of Today’s Popular German Car Manufacturers, Car

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BBC News Magazine, 2013, How German cars beat British motors – and kept going, BBC News, viewed 20 January 2016, <http://www.bbc.com/news/magazine-23406467>


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Make it in Germany, 2016, Automotive engineering, Make it in Germany, viewed 21 January 2016, <http://www.make-it-in-germany.com/en/for-qualified-professionals/working/industry-profiles/automotive-engineering>

Carophile, 2015, 15 German Cars That Changed History, Carophile, viewed 23 January 2016, <http://www.carophile.com/german-cars-that-changed-history/>

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European Union 2015 Study Tour Final Report Submission - Nuwan Ranasinghe 4927788

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