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Holden To End Production In 2016? If So, Big Problems Here For GM Photo:
 
 
Tim O'Brien | Dec, 06 2013 | 54 Comments

UPDATE: IT'S OFFICIAL - Holden Ending Australian Production By 2017


HOLDEN DENIES 2016 EXIT RUMOURS

Holden is denying the rumours, but many readers will by now have heard or read that the die is apparently cast: that GM is planning to exit local manufacturing “as early as 2016”.

According to both the ABC and The Australian, information has leaked from the offices of senior Government ministers that Holden was preparing to announce the decision this week - and had informed Government of its intentions.

Holden has now however, it is reported, postponed the announcement until next year.

These are just rumours and Holden has declined to respond, other than to confirm that “discussions with the Government on its future are continuing”.

Of course, an announcement, now, ahead of the handing down in March of the Productivity Commission’s report into Australia's automotive manufacturing industry, would have been bad manners at the very least.

At worst, it would have signalled a high-handed disregard for this Government and the support the brand has received over many years of co-investment and heavy tax-payer funded financial assistance.

Federal industry minister Ian Macfarlane today said that the car maker has denied the reports.

At risk are at least 45,000 jobs employed directly and indirectly by vehicle carmakers and suppliers here, and, worse, the prospect that Toyota may have its hand forced and soon follow should Holden depart.

Toyota and Holden share many of the same suppliers. Should one or the other leave, the loss of economies of scale (and the increased cost of these externally-supplied parts) would be felt hard by the remaining manufacturer.

So, rumour or fact, these are dangerous times for local car manufacturing, for those businesses that rely on the sector, and for the communities of workers and families that rely on both.

And add one more: it is also a dangerous time for car dealers carrying the Holden brand, and the thousands they employ.

Because Holden has a problem. And it can thank the dolts in Detroit for it, and the litany of poor decisions made in GM boardrooms that have been foisted on its Australian outpost.

We can also thank the naiveté of every Australian Government that thought it had a pocket deep enough to divert a boardroom that sits on the decisions of a company with a turnover in excess of US$150billion annually.

A couple of hundred antipodean millions thrown into a pot that size makes not the smallest ripple - GM will do what GM will do, and nothing will change it.

The problem for the brand here is that it relies so heavily on the Commodore and Cruze. The Commodore is certainly the best car in its stable by a country mile.

The Cruze is pretty good, but no ‘honey-pot’ drawcard to get buyers into showrooms.

Have a look at Ford for the moment. From the EcoSport, to the Fiesta, Focus, Mondeo, Kuga, Falcon, Territory, there is not a dud in the line-up.

These are very good cars. The exit of the Falcon and Territory will hurt, but there is a strong stable there and good stories for dealers to tell when negotiating with customers.

Now look at the Holden stable. No Astra there, no Corsa - the Cruze and Barina instead - nothing to counter Mondeo but a lack-lustre Malibu; a solid Captiva but hardly at the sharp edge, and a crude Colorado 7.

Is it only the Trax, outside of the Commodore and Cruze, that has any hope of inspiring buyers?

So, which model is going to bring customers in numbers to Holden showrooms? Hardly the little crossover Trax and the small Cruze.

When the Commodore goes, and the Cruze also ceases local manufacture, the GM brand will collapse here.

Above: The Cruze, a good car battling a line-up of excellent offerings.
Above: The Cruze, a good car battling a line-up of excellent offerings.

Thanks to some very poor decisions made some years ago in Detroit as to where Holden would source the basis for its Australian showroom - from Daewoo in the main - it simply does not have the strong product range of its key competitors.

It was nuts replacing the Astra with the Cruze. That decision, to take away a model and a nameplate that had a rock-solid and highly respected foothold in this market, and to replace it with the Cruze, was nuts.

It may have made sense in a Detroit boardroom, but made zero sense here.

And if you really wanted to undermine a brand in any market, you would give them the Epica. Holden soldiered on with it - awful nearly everywhere you looked - when it should have had the Insignia (while that car was fresh and new).

No amount of lipstick on the Epica pig, no amount of re-engineering by Holden, could ever turn that car into an acceptable medium-segment contender.

And now we get the better Malibu, but it is simply overwhelmed by the quality and capability of competitors like the Camry Hybrid, the Mazda6, and even the ageing Mondeo.

Above: the updated but ageing Mondeo is a better option than the Malibu, and the new one is coming next year.
Above: the updated but ageing Mondeo is a better option than the Malibu, and the new one is coming next year.

And where did the decision come from to bring Opel into this market? To bring a competitor GM brand here to compete against a GM brand already under pressure and struggling to hold volumes in its manufacturing operations.

Who, in GM headquarters in Detroit, could Holden ring to thank them for that ‘gift’?

Holden is now holding 10.8 percent of the Australian market - 10,477 sales in November. Half of that volume is Commodore (3097 sales), Commodore Ute (655), and Cruze (1846).

Take Commodore out of Holden showrooms, and where will that leave the brand? (Its salvation is not to be found in the Malibu, 168 sales for November.)

It is also true that part of Holden’s market share can be attributed to ‘loyalty buyers’: many in country areas where Holden showrooms have always been there as a simple fact of life, and when buying a Holden meant servicing and parts was simple.

Many too who bought Commodores through Holden’s heyday years, and kept buying Holdens, and bought a small Holden as a second car, or one for the son or daughter leaving home.

Without Commodore, and with a Daewoo-sourced (aka GM-Korea) Cruze holding the mantle, the brand will all-but collapse here.

It simply does not have the products to hold anything like the slice of the market it now holds.

When it shuts up its Elizabeth plant, Holden, the GM brand, will turn itself into a minority player overnight. We will see its market share tumble from 10 percent to less than three percent.

How many dealers will that market share support?

And those dealers, and this community of Australian workers, and the Australian government, can thank those dolts in Detroit. Not that this is likely to be of any concern there.

Tim O'Brien
TMR Managing Editor

 
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