Ken Gratton•12 Dec 2013
NEWS
No back-tracking for Holden
The decision to pull the plug on local manufacturing at Elizabeth is final, says departing MD2013 will go down in history as the year Australia's automotive industry lost its two most iconic manufacturing brands.
And neither will be back for an encore performance in the event the business environment improves.
Ford has already said on more than one occasion that there's no chance the company will return to manufacturing in Australia. Today it was Holden's turn, with managing director Mike Devereux telling a crowd of occasionally hostile journalists that the decision – made by Holden's parent company, General Motors – was set in concrete.
"GM has made this decision; it is irreversible," Devereux told the press after a protracted bout of questions digging for a concession that the company's decision had been made long in advance of the Holden MD's presentation at the Productivity Commission yesterday.
To state the obvious, the 'irreversible' decision is not just for the short term.
When the company closes the doors of its Elizabeth factory in 2017, the VF Commodore will be at the end of its effective design life, and Holden would have been facing the prospect of replacing it with a car of similar size and proportions, but with the front wheels driven.
That, as it turns out, was the least of Holden's problems facing the future, but nor was it a challenge that could be safely ignored. A move to a front-drive platform would have spelled the end of the traditional six-cylinder, rear-drive Aussie family sedan. That's the sort of car the loyalists buy from Holden and Ford. A car such as the Malibu or Chevy Impala could never hope to replicate the relatively strong sales over a long history that the Commodore has enjoyed.
And given Ford's recent experience with the Falcon, even a new rear-drive model couldn't be guaranteed of meeting the level of success required to make the local manufacturing program viable. Furthermore, Toyota's struggle for buyers to accept Camry or Aurion as an alternative to the traditional family sedan suggests projected sales volumes for a front-drive Holden would have been bleak.
"Our business case in this country for the two vehicles we were planning to make is no longer viable," Devereux said. The best the company could hope for was the same sort of sales volumes for a large front-drive sedan as Camry and Aurion combined – but without the export markets on which Toyota can draw to bolster its local manufacturing sustainability – and a small car like the current Cruze, which is not selling at profitable levels and is "trade exposed" as Devereux has described it in the past.
While the general news media present were sniffing around for any sign of conspiracy, demanding to know of Devereux when the decision to end local manufacture was really made, no one thought to ask about other repercussions from the news – even when the Holden boss offered a hint.
"Holden is not leaving Australia, Holden is committed to the auto industry in this country," he said. "What will happen is that Holden will become an importer of vehicles – like most of our competitors. We still have over 230 dealers, we expect that we will be a thriving brand in this country for many years to come, but yes, it will be a very different presence."
History tells us that those 230 dealers can expect to be far fewer in number after 2017, and no matter how carefully Holden stage-manages its exit from local manufacturing, there will be an inevitable drop in market share – a substantial drop, at that.
Perhaps it's too early for this subject to enter the public domain, but handling the dealer network and maintaining the brand image are two issues Holden and its management team have probably already tabled for further discussion in coming months.
Holden coverage on motoring.com.au
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Written byKen Gratton
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