Holden to end Cruze production this year

GM Holden will cease production of its Cruze small car in Australia at the end of this year. And hundreds of jobs are likely to be axed at its Adelaide plant as a result.

The move will make way for the new Astra hatch from Germany in the fourth quarter of this year and a new Cruze sedan from South Korea next year.

Meantime, Holden's last homegrown Commodore will continue to be produced with carryover Euro 4 emissions-compliant V6 engines until 2017, before its fully-imported replacement arrives from Europe in 2018.

The Commodore’s continued production is despite the stricter Euro 5 emissions standard being mandated for almost all vehicles built from November 1 this year. Euro 5 regulations are one of the major reasons Ford will end production of its Falcon and Territory in Melbourne in October.

Holden will continue to produce Euro 4-spec Cruze and Commodore vehicles beyond the Euro cut-off date following a "short-term deferral of new emissions requirements for certain locally made models" by the federal government. This was granted without fanfare in November 2015.

While Toyota's Melbourne-made Camry and Aurion models, which will also be axed when the Japanese giant closes its Altona factory doors next year, are already EU5-compliant, all Ford Falcon and Territory and Holden's volume-selling Commodore V6 and Cruze 1.8-litre models only pass EU4 emission regs.

Holden released its final version of the locally-built Cruze called the Z-Series  just a week ago. The name was last seen on the Cruze in 2014 before the introduction of a facelifted model in January 2015 and on the VE Commodore in late 2012, before the VF’s release in June 2013.

Holden won't comment on its small-car plan beyond the launch of the all-new Spark micro-car in April, but has confirmed it will release the new Astra around September, followed by the new Cruze.

Although sedan (and coupe) versions of the new Astra are again expected for Europe, it will arrive here as a five-door hatch, while the new Cruze will be a sedan-only model. Both small cars will represent Holden in Australia's largest single sales segment in a similar way to Hyundai's i30 hatch and Elantra sedan.

Holden desperately needs a new small car that resonates with buyers with Cruze sales down 18 per cent last year at just 15,222. The Holden accounts for just seven per cent of the mainstream small-car segment and ranks fifth in popularity behind the Toyota Corolla, Mazda3, Hyundai i30 and Volkswagen Golf.

Wagon and GTC coupe versions of the new Astra will follow eventually.

The timing of the new Cruze is critically important for Holden because of its impact on the Elizabeth plant, where last year 42,405 Commodores and 14,072 Cruzes were built on the same production line.

Holden has previously said it would stage a gradual reduction of its production workforce in Adelaide in the lead-up to its full closure in late 2017 rather than just "switch off the lights" when the time comes.

It cut 270 Elizabeth jobs in May 2015 following slow sales and says further product and manufacturing are announcements will be made this year.

Holden communications director Sean Poppitt would not confirm when production of the Australian-made Cruze will cease and would not reveal details of its deal with the federal government. However he said any change to Cruze production would impact workers at Elizabeth.

"Certain locally-made models have been granted an exemption for Euro 5 compliance. The timeframe and length of that exemption is commercial-in-confidence information," he said.

"We have approximately 1100 people at the Elizabeth factory. Of those, it’s approximately 1000 production workers of various levels and responsibilities. Cruze and Commodore are built on the same production lines, so virtually all our production employees work on Cruze," Poppitt told motoring.com.au.

In a press release issued on November 12, 2015, Federal Member for Bradfield and major project minister, Paul Fletcher MP, said Holden had been granted a EU5 reprieve for up to three months.

“The Government has agreed to a request from GM Holden that it be granted a short-term deferral of up to three months in meeting new higher vehicle emissions standards for certain locally made models,” he said in a press release.

That means Holden now has until February 1, 2017 to upgrade the 3.0- and 3.6-litre V6 in sedan and wagon versions of the Commodore Evoke, SV6 and Calais, and the Ute. The SS Commodore's 6.2-litre V8, which currently comprises about a third of Commodore sales, is already EU5-compliant. Holden no longer produces LPG or E85 versions of the V6.

Holden has said it was ready to upgrade its V6 to the EU5 standard, which was introduced in Europe in September 2009 (EU6 was introduced there in September 2014 but its application in Australia is still being negotiated) and would have done so by November 1 regardless of the government reprieve.

“GM Holden has advised the Government that this deferral would maximise the potential of locally-built models, which in turn will help to preserve job retention at GM Holden at its Elizabeth plant in South Australia and for its local suppliers, and strengthen the commitment to building cars until the end of 2017," said the minister.

“In making this decision I have weighed up the benefits highlighted by GM Holden, of allowing extended production and in turn employment, against the likely impact on vehicle emissions.

“The impact will be very small, as the vehicles affected by this deferral represent less than one per cent of the total number of new vehicles sold in Australia every year.

“In addition, GM Holden has advised me that the actual emissions levels from the affected vehicles do in fact meet the Euro 5 emissions standards. However the new regulatory requirement also requires changes to vehicles’ on board diagnostic systems, which measure emissions, and it is a deferral of this requirement (and the associated cost of complying with it) which underpins GM Holden’s request.

“Holden has also advised me that its new Commodore model, which will follow the model that will have the benefit of this deferral, will comply with Australia’s new emissions standards based on Euro 5."

In the Cruze's case, however, motoring.com.au understands Holden only needed the EU5 exemption for a period of just over a month – from November 1 to around the time the Elizabeth factory closes down for Christmas – making the end of Cruze production certain in December.