Cruze to be Holden's standard-bearer?

Holden may have shed a hundred jobs at its local manufacturing plant, but as the company's MD Mike Devereux explained earlier today, that's due to dwindling export aspirations rather than any inherent weakness in domestic sales.

"We're not seeing the kind of export growth we were anticipating..." he told the Australian media while outlining the plan to improve productivity at the company's plant based in Elizabeth, South Australia.

Production numbers for the domestic market have remained relatively stable, but it doesn't mean that the mix isn't changing. Total sales of Commodore derivatives and the Cruze (including the imported cars) were 87,694 for 2010 and 85,782 for 2011, according to VFACTS. So there was a dip of less than 2000 units in domestic sales last year, for those two product lines. It's looking very much as though the Cruze won't remain the junior partner to Commodore for long.

Sales data to hand indicates that the Commodore has held up fairly well, but as with Ford's Falcon and the Toyota Aurion, there has been a consistent trend downwards over the past four years. Commodore sales have remained stronger than either Falcon's or Aurion's, but Holden's large car has still slid from 51,093 in 2008 to 40,617 last year. What's not clear from those figures is just how much of Commodore's slump is due to buyers turning away from large cars, and how much is due to the introduction of the Cruze.

Commodore's most severe drop in sales occurred from 2008 to 2009, when it lost nearly 7000 units and, coincidentally, the Cruze was launched. In its first year — as a Korean-built import — the small car sold 12,590 units. Commodore sales actually bounced back in 2010, by which time many Australians were convinced the country's economy had dodged the GFC bullet. But the large car's sales improved by less than 1500 for the year, whereas Cruze sales rose to 28,334, for the full year — and as an imported sedan alone. Could it be that the Cruze is closer to the size of car Australian families actually want to purchase from a Holden dealer?

In 2011 Commodore's sales tally dropped again, down to the figure of 40,617 already mentioned. For the same year, which included the cessation of imported-stock sales and the delay in dealers receiving locally-manufactured stock, the Cruze sold 33,784.

The small car has certainly been popular — and there's no sign of it letting up. In the first quarter of last year it averaged over a thousand units a month behind the Commodore. That was more a sign of strong sales months for Commodore, because sales of the Cruze also rose during those months — just not as fast. But from April Cruze began to sell near or above the 3000-unit threshold, and slowly reel in the large car. In October the difference was down to 213 units and in December there were only 31 cars between the two.

And this year is looking like more of the same from the Cruze. Holden won't reveal figures for last month, ahead of the VFACTS embargo, but the company does admit that the factory struggled to meet demand for high-spec Cruzes during January. The first month of the year is traditionally a quiet one for locally-manufactured large cars, with the fleet managers still on holiday, so we anticipate that the official publication of VFACTS figures tomorrow will show the Cruze has outsold Commodore.

"We'll see more Cruzes being built," said Devereux looking ahead for 2012. "You'll see, I think, a richening of our Commodore mix away from the base vehicles — and then we sell a significantly rich mix of Cruze. Cruze [is] number three in the market, I believe, when the VFACTS [figures for January] will come out. The Cruze that we're selling is usually 2500, 3000 Cruzes a month; those are SRIs, SRI-Vs. We're not selling bargain-basement small cars and we're very proud of the mix that we've got in each model.

"But you're going to see gradually, over time, the Cruze continue to go from strength to strength — and probably take an ever increasing portion of our plan. It's a testament to the plan that Mark Reuss put in place years ago that we build a small car here and a large car. We've got a pretty stable domestic business model..."

While Devereux was careful not to say so, the logical outcome of Cruze sales going "from strength to strength" when Commodore sales have done little but slide in recent years is that the small car will eventually be built in larger numbers than the large car — simply to meet demand. So don't be too surprised if Cruze is the top-selling Holden by the end of the year. If it achieves that, the Cruze will likely be the first car other than Commodore to top Holden's sales charts since the late 1970s.

The question remaining then? Can Cruze also be the country's most popular car, as Commodore was for 15 years straight?

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