Mini car may be future of manufacturing
A tiny vehicle maker challenges the mass market, writes Adam Courtenay.
At a time when Australia's biggest vehicle manufacturers have to be subsidised to the tune of $200 million a year to survive, how is it that a mere slip of a car marker based in Melbourne says the sky's the limit?
Tomcar Australia just may be the future of manufacturing - small and focused on niche market segments to cater for individual needs rather than the mass market.
The company, which has recently produced its 34th vehicle, sells tiny but tough off-roaders on the internet. The cars look a tad like a 21st-century version of a Mini Moke, but chief executive David Brim says their low centre of gravity gives them the performance edge over the more fancied (so-called) off-road special utility vehicles. The demand has been almost all from the agricultural sector.
"We work on a demand pull strategy rather than a retail push one," says Brim. "That way we can engage directly with the customers and get feedback from them more easily. The old distribution model is broken. Manufacturers find themselves having to heavily discount to get rid of stock. They'll throw in this for that just to get stock clearances."
Tomcar sees itself as a disrupter - no car showrooms, no dealers, no middlemen. In this light, it's perhaps no surprise that it also accepts virtual currency. The company, which has fewer than a dozen staff, is the first car maker - and almost certainly the first manufacturer in Australia - to accept the internet currency known as Bitcoin.
Brim says he first became acquainted with the cyber-currency as a means to pay overseas suppliers. As he was using Bitcoin at first to pay for offshore vehicle parts, he realised it was only fair to accept the currency as payment for an entire vehicle.
The biggest problem with electronic payment systems is the fees, adding as much as 6 to 11 per cent to a transaction, Brim says. Bitcoin charges just 1 per cent.
But there are stories of Bitcoin being used for illicit purposes as it is unregulated and cannot be easily traced. It is a so-called peer-to-peer digital currency generated by computers performing complex mathematical calculations.
The "coins" are held in digital "wallets". All the same, there are perceived problems over its volatility. Brim says this can be managed by never hedging it with other flat currencies.
The car is the result of eight years of research. Brim and his brother Michael bought the patent from the original Israeli manufacturer - who used it purely for military purposes - and brought the concept to Australia.
The vehicle needed revamps to its braking, electrical and cooling systems. Its big selling point is that it is so simply made that any bush mechanic can fix it. It is bound together with an extremely tough metal frame, which the company has tested by hurtling the vehicle off a cliff.
Brim says 60 per cent of the car is locally made and he is looking to raise this to 80 per cent. So far only a few have been created. The basic car without add-ons costs $24,950 including GST.
Brim says there is interest from search and rescue forces as well as the military, but the company is focusing primarily on the agricultural sector.
While it began making the car in late 2011 through its manufacturing partner MTM, the vehicle is still only available to order. There is a three-week wait.
Brim expects revenue to increase eight to tenfold in the next two to three years. He and Michael own 90 per cent of the company and the rest is owned by family and friends.