Holden's big plans for small car

Holden has announced that it will build a second car line in the Elizabeth factory's South Body Shop where the Vectra was formerly built. Plans are afoot for the new car to go into production from the third quarter of 2010, potentially beating Ford's locally manufactured Focus to market.

As for the Focus, the new car will compete in the small car VFACTS segment and Holden will offer it in sedan and hatch versions. Dashing the hopes of those who were anticipating Holden would build a rear-wheel drive mid-size car on the Alpha platform, the small car will be built on the Delta II platform and run front-wheel drive. This platform will also serve as the basis for next year's all-new Lacetti (currently marketed in Australia by Holden as the Viva), the 2010 Opel Astra and the Chevrolet Cruze. The Cruze (pictured) is the first iteration of this platform to see the (official) light of day.

Both the South Australian state government and the federal government will underwrite some of the development costs for the new car and Holden may avail itself of a further heapin' helpin' of government hospitality through the Green Car Innovation Fund.

A press release issued by Senator Kim Carr, the federal government's Minister for Innovation, Industry, Science and Research, posited a contribution of $149 million from government coffers over three years. This amount is entirely sourced from the Green Car Innovation Fund.

To warrant that subsidy, the new car will offer green-car features such as start/stop technology and flex-fuel compatibility. In the start-up phase, it will be offered in both petrol and diesel variants.

According to Holden, the flex-fuels under consideration are E85 (a blend of 85 per cent ethanol to 15 per cent petrol), LPG and Compressed Natural Gas (CNG). E85 is a strong chance for the new car, given Holden's commitment to this alternative fuel for the Commodore (more here). Holden MD Mark Reuss admitted that the government's incentives to develop greener cars provided the impetus for the small-car project to go ahead.

"The Rudd Government's Green Car Innovation Fund has provided opportunity to turn our plans into reality," Reuss said during the press conference this morning.

"This announcement complements the vision we share with the Government of reducing Australia's dependence on foreign oil and making motoring better for the environment.

"It demonstrates commitment to an Australian automotive industry which extends beyond manufacturing at GM Holden to thousands of suppliers and dealers across the country.

"That demonstration was clearly seen by our parent company in its decision to support this program."

Holden expects that the new car will contribute as much as $80 million in wages and $30 million in R&D (at the company's Port Melbourne facility) to the local economy and there are potential foreign trade benefits associated with the new model, assuming Holden can find export markets for it.

Along with the introduction of the imported Volt (more here), Holden stands to offer an entire 'green' line-up for its small car range by 2012.

The announcement has been certainly welcomed by the Federation of Automotive Parts Manufacturers (FAPM), but the peak body that represents OE parts suppliers also sounded what might be construed as a warning.

In its own press released issued today, the FAPM's Chief Executive, Barry Comben, effectively laid down a challenge to Holden to support locally-based suppliers, rather than buy in parts from foreign suppliers.

"Our industry will expect nothing more than to be given a fair and reasonable chance to bid for contracts to supply GM-Holden with products and services for this new vehicle," said Comben.

And by the way, that sound you hear at Toyota's Sydney HQ is the noise made by collective rumination -- as the one company with actual expertise building a small car for the Aussie market in the last 10 years ponders how it can be done profitably in the current climate (more here) and particularly when you have two locally-built products competing for the same fleet buyers.