Analysis on Australian Car Industry Shut down and Its Foreign Exchange

Question: Why Toyota / Holden and Ford quits their car production plants and operations in Australia? Answer: One of the beginnings of economic downfall aspect has recently been happened in Australia, when its automobile industry and car components industry were announced to be shut down. The news regarding this shutdown plan was recently been communicated from three of Australian gigantic and powerful Car manufacturing Companies of the world. The news was taken very unfavorably by Australian general public and regulatory bodies as well. These Companies were none other than Toyota, Holden and Ford. And the news announcement was such that these companies were about to close their car manufacturing operations plants from the whole region of Australia. Moreover, in 2013, Ford and Holden have already announced their respective car production concealment plan in Australia from October 2016 and 2017 onwards respectively, and the latest news arrival came from the last remaining car manufacture in the boundaries of Australia, i.e. Toyota, with their announcement to shut down its car production plant from 2017 onwards (Taylor, Chan and Jabour, 2014). In essence, on overall basis after the announcement of these decision by respective companies, an Australian economy would have to face more than 30,000 of its human resources as getting unemployed (NewsComAu, 2014). Each of the above companies reported the same major and adverse reasons and aspects behind their car production closure in Australia and that mainly includes the existence of certain intense competitive forces in the car manufacturing market that are beyond the control of such companies productive and human resources in particular and a very strong and overvalued Australian currency of dollar, which had impacted the industry rather adversely in couple of past years, causing the final price of these cars behind the affordability of a reasonable common man (Couriermail.com.au, 2014). In addition, the unfavorable forecasts of companies marketing experts, regarding the future room of reduction in the overall scale of car or vehicle production in Australia, have compelled these companies to arrive at such a painful conclusion. How FX affected the investment decisions before appreciation of AUD Australian economy have remained an eye catching one for wide range of diversified peoples, especially, trader, businessmen and investor, residing in different locations of the world. Before the ultimate appreciation and rise in Australian currency in the world F market, many investor, FX traders and others, always considered and linked certain geological, geographical and governmental policy and regulation factors as favorable and beneficial for the future growth of Australian dollar in particular (Investing.com, 2014). As, Australian geological factors have given itself a wide range of wealth in high demanding natural resources like, oil, gold, agricultural products and other valuable resources, and geographical positioned of Australia have opened a huge trading opportunities for many Asian economies, which are at their far behind level in reaching the market saturation level for various natural resources being found in Australian regions (Stephen D. Simpson, 2011). Moreover, before the appreciation of FX value of AUD, many car manufacturing companies, e.g. Toyota, Ford and etc were also relentlessly and positively entering into Australian automobile industry, with the ultimate goal of earning an increasing rate of return on reasonable strengthen Australian currency. As a result couple of big names in car manufacturing companies as mentioned above, favorably pushes their capital investment with the sole purpose of establishment of various automobile manufacturing and car components plant into the several region of Australia to reap the benefits from the economical framework of Australian economy. Finally, relaxed and stable governmental policies in Australia regarding the interest rates, governmental and economy stability and lack of intervention policies of state in FX and currency market, have also opened many investment channels in Australian dollars from all around the world as well. Therefore, with the availability of all these glaring factors in the economy and geographical scenario of Australian region, they have substantially affected the investment decisions of many individuals, investors, traders and businessmen from all over the globe in taking the Australian Dollar at the level at what it is today. References or Bibliographies Taylor, L., Chan, G. and Jabour, B. (2014).Toyota to cease manufacturing cars in Australia. [online] the Guardian. Available at: https://www.theguardian.com/world/2014/feb/10/toyota-cease-manufacturing-cars-australia [Accessed 25 May. 2014]. NewsComAu, (2014).Thousands of office workers to lose jobs at Toyota, Holden, Ford. [online] Available at: https://www.news.com.au/finance/thousands-of-office-workers-to-lose-jobs-at-toyota-holden-ford/story-e6frfm1i-1226835343394 [Accessed 25 May. 2014]. Couriermail.com.au, (2014).No Cookies | The Courier-Mail. [online] Available at: https://www.couriermail.com.au/news/why-australias-car-manufacturers-toyota-holden-and-ford-all-conked-out/story-fnk1378p-1226827493012 [Accessed 25 May. 2014]. Investing.com, (2014).FX - Australian dollar stronger ahead of cash rate decision. [online] Available at: https://www.investing.com/news/FX-news/FX---australian-dollar-stronger-ahead-of-cash-rate-decision-274912 [Accessed 25 May. 2014]. Stephen D. Simpson, C. (2011).The Australian Dollar: What Every FX Trader Needs To Know. [online] Investopedia. Available at: https://www.investopedia.com/articles/FX/11/aud-fx-traders-should-know.asp [Accessed 25 May. 2014].