Holden: future is at home

Holden boss Mark Reuss (pictured) says his company has done what it needed to do to stay a viable part of the 'new' General Motors, but is facing a future based on domestic sales and demand.

Speaking last night on the eve of the launch of Holden's crucial new small car, Cruze, Reuss spoke openly of the likelihood of General Motors filing for a 'reorganisational bankruptcy' under US bankruptcy laws' Chapter 11 provisions, but passionately argued Holden's position on the 'positive' side of the beleaguered auto giant's ledger.

Maintaining GM would still prefer to reorganise outside the US courts, the Holden boss nonetheless considered the position 'Team Red' might find itself after a Chapter 11 filing.

"The liability part of the company and the separation of the good parts of the company on a worldwide basis is generally founded around liquidity and cash generation potential, and then revenue generation capability as time goes on," Reuss told the Carsales Network.

"We've worked very hard this past year, apart from any bankruptcy thing, to do [improve] that here at Holden.

"What we did in the last year is to secure both ends of the market with Commodore and the small car [a locally produced version of Cruze] that we've worked very hard on. And in addition to that we have invested heavily in Commodore

"That [investment and work] isn't for fun. These changes are related to the [improving] liquidity, cash generation and revenue potential.

"You can't just sit around and hope the economy improves and say 'we're in a good place'... That's a disaster. This has been a complete offense [strategy] over the last year we've played here at Holden to make sure [we're on the asset side of the ledger]," Reuss stated pleading Holden's case.

According to Reuss, he has not received guarantees from Detroit about the future of Holden. Indeed, he argues such guarantees are beyond the capability of the corporation's officers to deliver.

"I don't think it's totally GM's call right now," Reuss explains.

"We've had involvement [in the restructure plans] from two outside separate entities [Ed: the US auto labour union UAW and US Government] and each country [regional GM operation] has done this around the globe -- look at the cash generation and revenue potential in the future around a very conservative market outlook...

"We feel we've done everything humanly possible to do that [maximise Holden's prospects] but at the end of the day when the parent company goes through this, each one of the entities will be looked at by those outside parties and we'll go from there," Reuss explained.

"There's no guarantee on any of this. None at all. And we treated it as such from day one. [But] We feel very good about where we [Holden] are," he stated.

Reuss says Holden has "huge value internally" to a reborn GM. But he says Holden must evolve so it can prosper on a domestic market base.

"If anything this had focused our business on what we need to do to be a good company in Australia first. And anything we do outside of that is a great thing," Reuss opined

"We'll try and have export markets, but to have an entity fully dependent on export markets in this world we're dealing with today is probably not the right business model," he said.

To this end Holden has announced it will begin production of a smaller four-cylinder front-wheel drive car alongside Commodore at its Elizabeth plant in South Australia next year. The first of the four-cylinder cars is due to roll down the line at the end of the third quarter on 2010.

Though Holden is being coy about the name and nature of the vehicle it is almost certain it will be a hatchback version of the Cruze which launches officially in sedan form later today.

Reuss says many things have changed to allow Holden to build a small car profitably in Australia. He argues the ability to leverage global vehicle architectures is the key factor.

"Global architecture is different from a world car. Many have tried to build a world car and failed. A global architecture can be tailored for individual markets," he says referencing the fact the local Cruze will be very much a product of Australia.

As much as the four-cylinder car is important for Holden, however, Reuss stated Holden had not considered a business case for local manufacture without Commodore.

When asked if Holden could survive as a manufacturer in Australia without Commodore, Reuss answered candidly.

"I don't know -- we haven't run the business case. It's not something quite frankly that we've studied. We're still the best-selling car here and we think the things we're going to do to Commodore in the next few years makes us potentially the only game in town."

However, he conceded the wider GM world can no longer afford to fund large scale 'homeroom' operations such as the development of the Zeta platform that underpins Australia's favourite large car.

"It'll be a different business model than it was," he said.

"I would say [in the future] we'll have the 'best' rear-wheel drive in the [GM] world rather than the 'only'."
 

Read the latest Carsales Network news and reviews on your mobile, iPhone or PDA at www.carsales.mobi