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Australian Motor Vehicle Manufacture: Volkswagen

1939 was an important year for many things, not the least being the launch of the Volkswagen Beetle, a remarkable vehicle that has achieved the highest number of vehicles of the one shaped model ever produced by any manufacturer, and it is still the most loved, cared for, restored, joked about, practical, reliable, and long lasting vehicle in the world. Birthed in 1931 by a brilliant German engineer by the name of Ferdinand Porsche who had a dream to build a people's car. In January 1934, Dr Porsche submitted plans for a People's Car to the German Government Ministry of Transport which were shortly afterwards approved, and the project commenced. 30 prototypes were built by Mercedes Benz, and a batch of a further 30 vehicles followed. They were test-driven day and night, and all performed extremely well.

A state-owned company, Volkswagen Development Corporation, took control and in 1938 the vehicle was called KDF Wagen (Power Through Joy). Prototypes were exhibited in 1938 at the Berlin Motor Show. Production started in late 1939.

During the war years, the Volkswagen factory was badly damaged during the war. With the factory rebuilt, sales commenced in 1948. An Export model was launched in 1949, but it wasn't until 1955 that Beetles began to be assembled from factory supplied CKD packs in Brazil, Ireland, South Africa and Australia. A number of Beetles had been privately imported to Australia by European migrants prior to 1953, the year in which pre-War DKW representative Baron von Oertzen, then working for the VW Factory, visited friends in Australia and appointed Regent Motors holding in Melbourne, as Australian Distributor. Shortly afterwards, six state distributors were appointed to market the Beetle.

The first shipment of some 31 Beetles arrived in Sydney in 1953 and went on display at Lannock Motors, William Street Showroom. These cars had arrived as CKD kits, that is, as individual components that had to be locally assembled. Martin & King in Clayton, Victoria (railway stock builders) started assembling Beetles in 1954, and the six state distributors plus a handful of VW Dealers sold the cars as quickly as they came off the assembly line. By the end of 1954, 1,280 fully imported Beetles had been sold and 3,084 CKD Beetle packs shipped to Australia.

In 1955, Regent Motors made the decision to participate in the then famous Redex, Ampol and Mobilgas Trials, and overnight, nearly every Australian saw the Beetle in action. Winning regularly Ist and 2nd price in these trials, the Beetle gained respect for ruggedness, reliability and value for money.

Inside Volkswagen Australia's Clayton assembly plant

A new company, Volkswagen Australia, was formed in 1959 to begin the manufacture of Volkswagens in Australia from a combination of imported and locally made components. The Martin & King plant was bought, and an overall investment in plant, equipment, laboratories and buildings resulted in $A24 Million investment by VW Germany in Australia. Soon, a modem press shop was built at Clayton and put into operation to produce all body panels in Australia, with dies being manufactured by Chrysler in Adelaide.

A modern testing laboratory was established in 1960 that set new quality standards for the Australian supply industry. The very latest paint technology was applied, with full body submerging baths, special anti-rust treatments, and heated paint booths to bake the enamel finish, something no other Australian car manufacturer was doing at that time.

In 1961, as a public relations exercise, a number of standard Beetles were modified and floated on Sydney Harbour, the Brisbane River, and the Swan River in Perth. VW Dealer Peter Webster from Midland, WA, made the front page of the local newspaper when he attached a small snorkel and a propellor to the crankshaft pulley of his Beetle, and drove it in the Swan River as the Premier of WA was cutting the ribbon to open the Narrows Bridge close by. A month later in Sydney, Lanock Motors prepared a Beetle and crossed Kogarah Bay and Sydney Harbour to everybody's amazement.

Beetle engines, transmissions, chassis, bodies, in fact nearly every component were now being produced in Australia, either by Volkswagen at the Clayton plant or the hundreds of local suppliers, such as Bosch, Hella, VDO, Armstrong, Henderson, Pilkington, Dulux, etc. 1964 was the peak year in Volkswagen Australia's success as a vehicle manufacturer. Australian made Beetles were exported to New Zealand, Norfolk Island, Fiji, Samoa, Papua New Guinea, and The Solomon Islands. 28,000 Beetles were sold in one year alone; and the 200,000th Volkswagen produced in Australia rolled off the assembly line.

Very few people know it, but during the boom years of the mid 1960s, Volkswagen Australia came up with a fully Australian designed and built model, the Country Buggy, that was somewhat of a cross between the Jeep and a Mini Moke - some unkindly calling it a Joke! The first Country Buggy came off the production line in December 1967. The Country Buggy's life was to be short-lived, however.

Volksagen Country Buggy

A number of Japanese manufacturers, led by Toyota and Datsun, were now making major inroads into the Australian car market, selling cars loaded with extras at very competitive prices that the local manufacturers found hard to match and still make a profit. Volkswagen's share of the Australian car market had been decreasing since 1964 when it peaked with a 7.7% share. In 1965 this share reduced to 6.3% and fell further to 4.8% in 1966. In 1967 it dropped to 4.3%.

In an overall growing market, the loss of share caused considerable financial pressures. In 1966 the company experienced a loss of $3.72 million, its first trading loss ever. It required some significant changes to the overall way of doing business. In December 1967 plans were developed to implement a major re-structure across Volkswagen Australasia Limited. Far reaching steps were taken to reduce the manufacturing depth in Australia. Initially, a new company, Motor Producers Ltd was formed. Motor Producers took over the factory of Martin & King, a subsidiary of Clyde Industries that had previously assembled cars using Riley and Wolseley components.. Nissan shifted assembly from their plant at Pressed Metal Corporation in Enfield Sydney in 1972. Nissan subsequently erected an engine manufacturing plant at Clayton.

Motor Producers Ltd applied to the Australian Government for permission to assemble their vehicles under an amended local content plan. The former plan called for 95% content, Motor Producers now sought a reduction to 50% for Type 1, 45% for Type 3 and 45% for the Country Buggy. Government approval was forthcoming. There was no local content requirements attached to the Type 2 (Kombi) and those vehicles continued to be assembled in the factory from CKD units. Further savings were made during the year through total closure of the Press Shop (Body panels) and discontinuation of Engine reconditioning operations by October 1968. In reality, Motor Producers was moving to a role as vehicle assemblers, thus permitting the introduction of models from other makes to their assembly lines. At the beginning of 1966 there had been over 2,000 employees. 1968 began with 1,653 employees but by December this had reduced to only 971 employees.

The main casualty in this this shake-up was the Country Buggy. As Volkswagen was getting out of manufacturing vehicles, having sold off its presses to Volkswagen Brazil, closed the press shop and disposed of tooling and equipment, there was no likelihood that Country Buggy production could continue beyond the end of 1968. Though it was selling well, production ceased only eight months after its official release. A total of around 1,775 Country Buggies were produced. Of these, 887 units were sold in Australia; the rest were either complete Built Up units exported to several countries including Papua New Guinea, New Zealand, Pacific islands and South Africa, or CKD units exported to Malaysia or the Philippines, with the latter taking the majority of units.

Volksagen Beetles being assembled alongside Datsun 1600s at Clayton, 1969

Due to falling sales, the operation reverted to CKD assembly only in 1968, starting with the 1500cc Beetle. A new company, Motor Producers Limited, was formed and operations were expanded to include Datsun and Volvo models as well as Volkswagens, and later, Mercedes trucks. By 1975, the plant was assembling more Datsun 1200s and 1600s than Volkswagens, so a decision was made to sell the Clayton plant to Nissan and to cease all local assembly of Volkswagens. Regretfully, full importing Beetles was not economical due to unfavourable exchange rates, stricter safety and more costly emission standards; the Beetle was withdrawn from sale in Australia in January 1976. Approx 265,000 Beetles had been sold in Australia.

In 1977, the production run of Datsuns (now called Nissans) at the Clayton plant was over 127,754 vehicles. In addition to the plant, Nissan established their Australian headquarters at nearby Dandenong. By 1990, Nissan cars were experiencing a major sales slump and sales volumes that couldn't sustain their operation. The locally made Pulsar was helped to an extent by Holden's decision to share the model by rebadging it as an Astra, which lifted volumes closer to the 40,000 pa break-even point. But in 1991, Holden decided to do a deal with Toyota, thus reducing Pulsar volumes even further. Despite being rebadged and sold by Ford as the Corsair, the Pintara range was selling sluggishly also. Nissan saw no other way out but to quietly pulled the pin on local production, sell its Clayton factory and retreat to the safety of importer-only status. The Clayton factory was stripped bare and sold to the Government who passed it over to Telstra for use as a warehouse.

Australian Motor Vehicle Manufacture: 1950s and before | 1960s | 1970s | 19780s and beyond

'Antarctica 1' was an Australian made Beetle that served in Antarctica for 12 monthsback in 1963 together with an Australian Country Buggy. The Buggy was designed and produced in Australia from 1967. The exploits of Antarctica 1 were very well documented and publicised as early as May 1963. Volkswagen Australia used pictures and stories about the car in much of their advertising at the time. This continued in 1964 when Antarctica 2 completed a similar tour of duty. Over the years Antarctica 1 and Antarctica 2 formed significant historical milestones in the evolution and growth of VW in many parts of the world.

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