New Commodore To Be Exported To The US? Just Wishful Thinking…

Fairfax media is reporting this week of gathering rumours from GM US that a new export program to North America for the Commodore is on the cards.

As evidence, the speculative report cites comments from General Motors' North American chief Mark Reuss (and former Holden boss) that a new rear-wheel-drive large car program is planned for Nascar racing - a move away from the front-wheel-drive Impala silhouette.

This is to be based on "a new nameplate to the brand’s line-up" according to an earlier GM statement; in other words, based on a new rear-wheel-drive model in GM US car showrooms.

Drawing a very long bow, Fairfax believes this is likely to be the Commodore (a conclusion arrived at, it concedes, through "a process of elimination"), and thus likely to be the basis of a new export program for GM Holden.

We struggle to draw the same conclusion.

There is of course little point asking Holden boss Mike Devereux what, if anything, is going on. No-one in Holden will be spilling the beans on any future plans it may have for any of its models until it's good and ready to tell the tale.

But there are a whole lot of reasons - 103.2 at the moment - why the Commodore won't be going anywhere, and least of all as an export program.

That figure, 103.2, is the current value of the Aussie dollar in US cents (and by the time you read this, it will likely have changed - perhaps a little higher, perhaps a little lower).

The point is that while the Australian resources and mining sector continues to thrive, the Australian dollar will remain high.

And while it remains high, exports from Australia's manufacturing sector will remain comparatively uncompetitive as a result - and thus unattractive as a source of product for a global company such as GM.

But surely the high dollar won't last... is that what you're thinking? And don't these global companies hedge on exchange rates when planning an export program?

Yes to the latter, but there is little on the horizon to suggest the Australian dollar will soften significantly enough over the next three to five years to make any major export program of Australian-built cars attractive to GM US. (Small numbers of specialist cars like the Caprice PPV notwithstanding.)

At least not while the Australian resources sector enjoys such generous Government incentives and rebates, and not while its booming profits are taxed at a comparatively low rate, and not while there are such hungry near markets voraciously swallowing whatever we can dig out of the ground, as fast as we can dig it out. 

The Australian resources sector is a honey-pot for global investment and sucks in vast amounts of foreign capital. As of February there were a mind-numbing $900billion of projects in the resources 'investment pipeline'.

Last quarter of last year alone added $19billion in new projects.

And it's not likely to slow, even with a (perhaps) slowing China. Currently, 70 percent of resources exports are bound for Asia; of which China accounts for 30 percent. But India continues to gather pace, as does South East Asia.

Which means the Australian dollar, regardless of a stuttering and slowly recovering US economy, will remain high well into the development cycle of the next large car for the Australian market - or US market.

So, short of a miracle, any major export program for the new Commodore is most, most, unlikely.

All this of course puts to one side other discussions about what platform will sit under the next all-new Commodore, and where it will be sourced, and who will develop it.

In our view, the weight of probability is that Holden engineers will develop a global RWD large-car platform, as they did in developing the shared platform for the Commodore and Camaro.

And, like the Camaro, that platform will form the basis of a North American model with a US hat sitting on top of it - manufactured in North America for the US market, possibly manufactured here for the Australian market (or maybe we'd build the next Malibu or Impala with a Commodore badge), and manufactured in China under the Buick brand for the Chinese market.

But any scenario involving a rebirth of Commodore exports to the US in any significant numbers is just wishful thinking.

Tim O'Brien
TMR Managing Editor and Industry Analyst