Saving Holden would have required billions

GM Holden’s last boss Kristian Aquilina says he looked under every rock to try to save Holden.

But the investment required to reboot Holden was on a scale that could not deliver a “sufficient” financial return to GM – even in the face of closure costs approaching $A1.5 billion.

Speaking to the Australian media after yesterday’s shock announcement that the Holden brand would be axed (GM used the term “retired”), Aquilina detailed how company insiders undertook an effort to cement a business plan to create a “flourishing” Holden.

In the end the sheer scale of the task was insurmountable, he said.

“In this investment cycle, we developed an ambitious investment – an investment proposal to turn around our current performance and to see Holden flourish in this market, not just survive,” Aquilina stated.

“And over a number of months, GM undertook an exhaustive analysis of that plan together with our parent company we chased down every conceivable option, every strategy, every plan… We looked under every rock.

“We have had multiple rounds of discussions and have tried to find a way to defy gravity but the hard truth was there was just no way to come up with a plan that would support a competitive, and growing and flourishing Holden – and also provide a sufficient return to our investors,” he said.

Despite confirming closure costs for GM’s operations in Australia and Thailand could top $US1b, the scale of the investment required to reboot Holden was not something GM International Operations vice president Julian Blissett was willing to detail.

“I’m not at liberty today to go through our internal investment plans and the various study scenarios...

“Kristian and the team here in Australia and New Zealand put together a plan for future product and for future investment in the brand and while I’m not willing to go into the details commercially the reality is, is the costs were significant and we simply couldn’t get a return on those investments,” Blissett said.

A key challenge to Aquilina’s reboot plan was the availability of cutting-edge right-hand drive new models. The cost of engineering these new-generation vehicles for RHD would have had to be borne largely by the Australian operation.

This could easily have amounted to hundreds of millions of dollars even on a truncated portfolio of vehicles.

Then there’s the capital required to rebuild – although Aquilina downplayed the Holden brand’s battered image.

“This is a business that has changed dramatically over a short period of time… Customers were still buying Holdens and there still many customers out there still buying Holden vehicles.

“I guess perhaps the issue here wasn’t necessarily… around the performance from a sales perspective. It was really around our investment priorities for GM.

“In the end, our participation in the market that is as competitive and active as the Australian market, that takes a fair bit of investment – not just in product and that is bespoke investment for GM, right-drive and so forth – but it also takes a massive investment in the customer experience in supporting a brand that is unique.

“It’s the only place… two places in the world where it’s marketed and we needed to have some investment in the retail network too and those were big, big numbers that need to deliver a fair return for investors putting in that dollar.

“It’s a return that’s difficult to get in a very highly fragmented market with 70-odd competitors competing for one per cent of the global automotive [market],” Aquilina stated.