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Tim O'Brien | Dec, 08 2013 | 36 Comments

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

The rumours of an imminent announcement of Holden’s intention to shut down manufacturing operations here refuse to die, and with each hour a little more information surfaces.

Aside from the whispers originating from within the Abbott Government, and news from within GM Detroit itself that a press release had been prepared by GM US announcing the closure of Holden’s Elizabeth plant, one more piece to the puzzle has emerged.

GM Detroit on Thursday announced that Chevrolet would be withdrawn from sale in Europe.

GM vice-chairman Stephen Girsky, said that the decision had been made to “focus resources on reviving the company's Opel brand”.

On the same day as that announcement, the Abbott Government announced the finalisation of a free trade agreement with South Korea, opening up that market to Australian agricultural, resources and energy exports.

This deal is expected to benefit the Australian economy by up to AU$5billion between 2015 and 2030, but there are concessions.

A statement from Trade Minister Andrew Robb accompanying the announcement of the FTA concedes:

"Some sectors (in Australia) may face increased competition from imports of Korean products and services, such as motor vehicles, automotive parts, steel products and textiles, clothing and footwear," it reads.

“... such as motor vehicles...” Well, yes, therein is the closure to the loop.

The automotive manufacturing plants of GM Korea (formerly GM Daewoo) that were supplying Europe can turn their unused capacity to the Australian market, where the door has now been opened wide.

Cheaper and more profitable; so goodbye Holden?

The announcement of as much, whether it comes in the next few days, or in late January as some speculate, will be a disaster for Adelaide, for dozens of smaller and larger Australian parts and component suppliers, and a disaster for Holden workers.

And it will also be a disaster for Holden dealers who seem to have been forgotten or overlooked in this discussion.

MORE: Holden To End Production In 2016?

There are 278 Holden dealers selling and servicing 10.8 percent market share in Australia. Those dealers have this year sold 102,909 cars (to the end of November), and will likely sell another 8000-10,000 cars in December.

But half of those sales are Commodore, Cruze, Caprice and Holden Ute, all manufactured here.

It is simply fact that Australian buyers have not warmed to Holden’s ‘Korean stable’.

The Barina and Spark are soundly trounced in the light-car segment, the Malibu has barely bothered the scorer, and the Captiva 5 and Captiva 7 are also soundly trounced by Mazda CX-5, Forester, RAV4, Territory, Grand Cherokee, Kluger and Prado.

Without the Commodore and Ute, the essential core of the GM Holden brand disappears. And it will not be recaptured by anything from GM Korea.

GM will be staring at a prospect of worse than a halving of Holden’s market share.

It will likely drop to less than 3.0 percent; a rival not for Mazda, but for Kia and Honda, with 2.6 and 2.7 percent market share respectively.

Which will decimate Holden dealers.

GM is understood to have a compensation package of up to US $1billion for European Chevrolet dealers affected by the withdrawal of the brand from that market.

Holden dealers here will rightly expect substantial compensation should Holden announce a cessation of manufacturing operations and the deletion of the Commodore and Holden Ute from the vehicle range.

Because Holden dealers and their employees also have families, contribute visibly and substantially to the communities in which they operate, and are no less deserving of support should they face job losses and closedowns.

Whenever the announcement comes as to the decision on Holden’s future, and it seems it will come, its impact will be felt not only in SA, and not only among component and parts suppliers, but in the 278 communities where Holden dealers operate.

And, if as reported, the decision has been made but simply withheld, it makes a farce of the Productivity Commission’s current inquiry into the Australian automotive manufacturing sector.

We agree with the AMWU’s Paul Bastian, “Holden has a responsibility to let its workers know whether these stories are true or not."

Tim O'Brien
TMR Managing Editor

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