Tim O'Brien | Aug 8, 2009

HOLDEN, UNDER PRESSURE at home with a 15 percent slide in sales, and having lost the Pontiac G8 export program to the United States and North America, has secured a $200 million line of credit from the Federal Government’s Export Finance and Insurance Corporation (EFIC).

The arrangement was announced yesterday on the EFIC website.

According to the press release accompanying the announcement, “The facility has been put in place to provide support for GMH exports of vehicles, parts and engineering services to Europe, the Middle East, Africa and Asia as the Australian manufacturer establishes stronger market links under the newly created General Motors Company.

“The Government has approved the request from GMH under the EFIC Act. The secured line of credit of up to $200 million has been agreed but not drawn and is subject to commercial terms and conditions,” it said.

The EFIC facility is best described as an overdraft targeted to export activity that Holden can tap into, in whole or in part (it is not a ‘grant’).

And, although it has not been drawn, the line of credit will no doubt assist Holden as it looks to secure new export opportunities for the Commodore, Statesman and its V6 engine export programs.

However, at least one news report today has described the package as a “lifeline”... by implication that it is to ‘keep the company afloat’.

This is clearly an overstatement and counter to the facts. Though things are tough for Holden, and for nearly all car makers thanks to slumping sales everywhere, the facility is designed to assist export programs, which, with the loss of the G8 sales into North America, Holden will be working hard to replace.

The news report is also counter to outgoing chief Mark Reuss’ comments on June 2 at a press conference called in response to the announcement of the filing for bankruptcy by US parent, General Motors.

Then, Mr Reuss said that Holden was liquid – cash flow positive – in a down market.

This was a result of Holden having moved quickly, beginning last year, to match production output with demand, having reduced inventories and having embarked on a company-wide campaign to reduce costs.

“We are going to recoup our export losses (the loss of the Pontiac G8 program to the US) with new programs,” Mr Reuss said then.

The EFIC facility is in addition to the funding secured by Holden under the ‘Green Car’ Innovation Fund, established to assist local vehicle producers following the Bracks’ review into the Australian vehicle manufacturing industry.

“Holden is an iconic Australian company and EFIC is delighted to support GMH’s ongoing export activities,” EFIC Managing Director and CEO Angus Armour said.

The facts are that Holden, while down 15.1 percent across the brand YTD, is down just 9.9 percent YTD in all-important Commodore sales. This is compared to a booming first half last year when sales were headed into one million-plus territory before the US Lehman Brothers collapse in September.

So, don’t believe all you read and hear. It is not yet time to ‘bring out the dead’ on the Australian car industry.

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