Holden Commits To $1Billion Investment In Two All-new Models; $275million Federal Co-investment

Tim O'Brien | Mar 22, 2012

At a media conference today, GM Holden and Federal and SA Governments have jointly announced a $275 million assistance package for GM Holden to keep it manufacturing cars in Australia.

“Holden will receive government co-investment of $275 million and directly invest well in excess of a billion dollars in (a) 10-year vehicle development and manufacturing program," Holden Managing Director Mike Devereux said.

“The investment will help Australia retain its capability to design, engineer and build cars with two all-new vehicles going into production at Elizabeth, South Australia, in the second half of this decade."

Today's announcement is not unexpected and follows some months of hard-headed negotiation with GM both in Australia and in Detroit.

Of the announced $275million in taxpayer support, $215million is coming from the Federal Government and $50million from the South Australian Government. The Victorian Government is tipping in a further $10million.

Since the scrapping of the $6.3billion Green Car Innovation Fund, originally planned to run over 13 years but dismantled after three, market conditions for our local munufacturers have been increasingly difficult.

Although local sales in overall numbers have remained strong for Holden, despite slipping market share, it is widely known that Holden exports have suffered heavily from the effects of the high Australian dollar - dropping from a high of 60,518 units in 2005, to be less than 7,000 today.

In replacing the GCIF, the Federal Government pledged continuing support for the industry on a project-by-project basis. There is a lot of money still on the table, $3.4 billion no less, available through the Automotive Transformation Fund, set to run until 2020.

Ford Australia announced a $34million Federal Government co-investment in January; Toyota however, at the launch of the new Camry Hybrid, announced that it had secured investment funding from within Toyota's global operation, and without Federal Government assistance, for the development of the new model.

“Government investment has been instrumental in reshaping Holden’s manufacturing operations and has enabled us to build the Cruze small car in Australia, rather than import it," Mr Devereux said.

“We are acutely aware that with government investment comes great responsibility. We are focused on continuously improving our efficiency and quality to help us be amongst the best in the GM world.

“It’s also important that people understand the economic benefits that flow from this public investment."

The reality is that taxpayer-funded assistance to the Australian vehicle manufacturing sector is very low by world standards; considerably less per head of population than the investment assistance provided by Germany to its car manufacturing sector, for instance.

It is also barely a fraction of the assistance given to the mining sector in the form of subsidies, concessions and rebates - not the least, a massive $2billion diesel fuel rebate.

Holden is also expected to soon announce that the replacement for the Commodore will be a US model - likely, we think, to be the Malibu or the upcoming next-gen Impala.

In effect, such an announcement will be nothing new. The VB Commodore of course was the local adaption of the German Opel Commodore when launched here to replace the Kingswood in 1978.

GM, like Ford, has adopted a global policy of shared platforms, shared product development, and shared drivetrains across its global operations.

As Mike Devereux said in a phone hook-up last month: pointing to the hundreds of millions of dollars of investment needed for the auto industry in this country, and the role of co-investment regimes in other vehicle manufacturing countries, "Australia has to play the game, or it (vehicle manufacturing) simply won’t exist.”

- Tim O'Brien
- TMR Managing Editor and Industry Analyst

Filed under: Featured, Holden, manufacturing, News, kim carr, mike devereux, industry, julia gillard, tim o'brien, jay weatherill, federal funding

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  • 5valvepercylinder
    5 valve per cylinder says,
    3 years ago
    Can this upcoming 2 model be considered all new?, or will it just be another vehicle in the GM family re-bodied into another range but designed/built here like the Cruze hatch? Maybe one of them could be an Australian designed Malibu Estate..
    • MotorMouth says,
      3 years ago
      1 like
      I think by "all new" they mean not the current Cruze or Commodore but whatever models replace them. i.e. Models that will require their assembly line to be completely retooled, hence the cost involved. It is 99% certain that both will be global models and I reckon it will be the next-gen Cruze and the soon to be revealed Impala to replace Commodore, or be rebadged as the next-gen Commodore.
      • Balthazaaaaargh says,
        3 years ago
        I reckon they'll build Malibu here
        • MotorMouth says,
          3 years ago
          1 like
          I can't see that, as it will always be cheaper to build it in Korea. I reckon it will have to be something a little more unique. I'm sure the only reason they moved Cruze production here was to take advantage of spare production capacity and to allow Holden to expand the range.

          Although, thinking about it, Malibu and Impala are built on basically the same platform, so maybe they will do both here?
  • Roger says,
    3 years ago
    1 like
    Lets hope they learn to put it togther properly this time.
  • matt says,
    3 years ago
    no locally made cars, no more local money, im all for supporting them through tax's if they build cars from the ground up here, but not if we are slapping together world models with imported parts.
    • Balthazaaaaargh says,
      3 years ago
      the fact that it's injecting billions into the economy and keeping people in jobs isn't a good enough reason to support it? wow.....
    • MotorMouth says,
      3 years ago
      1 like
      Why should that matter to the government (or you)? What the government is interested in is maintaining the 60,000 or more jobs in the industry. If building global models is the way to ensure those jobs stay here, then the government won't be at all phased, at nor should they be. After all, VE is the first Commodore not based on an Opel platform, so making uniquely Australian cars has been the exception for Holden, not the rule.
  • Dave says,
    3 years ago
    Pathetic. Toyota managed to get their own funding without begging for handouts, why can't GM and Ford do it?
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