GM to Shutter Holden Production Operations in Australia by 2018
After a week of media speculation, and amid repeated denials a decision had been taken, the axe was wielded on General Motors’s Australian manufacturing operations Tuesday, with Holden to become an all-import brand from 2018. The decision ultimately spells the end for the Commodore—well, come the end of 2017, once Holden’s facilities in Victoria and South Australia close. The decision also foreshadows the end of local Cruze production, with that model set to be sourced from South Korea. In a statement, outgoing GM CEO Dan Akerson attributed the decision to a “perfect storm” of factors. According to Akerson, the announcement reflected a raft of negative influences for the industry, including the sustained strength of the Australian dollar, a petite and very competitive domestic market, and high cost of production. Earlier this year, Holden chief Mike Devereux had admitted the cost to build a car in Australia was $3750 (harshly $3350 U.S. at today’s exchange rates) more than in other GM factories around the world.
The precise timing of the decision is unclear, but the announcement lends weight to numerous media reports that claimed a decision to close Holden’s production facilities had been taken last week. While a spokesman for Holden reiterated to Car and Driver that a final decision to withdraw wasn’t taken until early this week, it’s likely an informal decision amongst executives in Detroit had already sealed Holden’s fate weeks prior.
While the Australian government has publicly committed to generous industry subsidies in latest years, such support has been contingent on continued investment from the automakers themselves. With the industry’s long lead times necessitating Holden to commit to a multi-million-dollar investment before June of next year if it was to proceed building cars in Australia for another generation, today’s announcement reflects the company’s conviction that viability was not possible with current or projected volumes. A report last week in The Wall Street Journal cited a senior industry representative as telling the company would “not want to put more money in after the current model run winds up in 2016.” Notably, the company’s viability has been hit hard by falling exports in latest years, with only 14,500 cars sent abroad last year, compared to a peak of 60,500 in 2005.
But declining exports haven’t been Holden’s only obstacle. While the company’s domestic sales have not dropped as precipitously as Ford’s—which led the Blue Oval to announce the closure of its own Australian operation earlier this year—Holden has nevertheless suffered from a relentless sales slide over the past decade, driven in part by the market’s shift toward smaller cars, but also by factors such as the reduction of tariffs (making imports more competitive) and a preference by consumers for more-prestigious nameplates.
While Holden as a carmaking operation has always been a wholly GM-owned entity, the decision to shutter its operations has engendered a strong emotional response from those who cling to its status as a local icon. Through sixty five years of local car manufacturing, dating back to the original 48-215 of 1948, GM’s local offshoot has consistently projected itself as “Australia’s own.”
Along with plans for Holden to be a national sales company and parts-distribution center, GM has committed to retaining a global design studio in Australia beyond 2017. It is also understood that around one hundred engineering jobs will be kept.
In the meantime, attention has already turned to Toyota, the only manufacturer still committed to manufacturing in Australia, and the attendant viability of domestic suppliers—many of which depend on both Toyota and Holden to maintain sufficient scale. Toyota said that the decision would “place unprecedented pressure on the local supplier network and our capability to build cars in Australia.” It added the company would work with suppliers, key stakeholders and the government “to determine our next steps and whether we can proceed operating as the foot vehicle manufacturer in Australia.”
GM to Shutter Holden Production Operations by two thousand eighteen – News – Car and Driver, Car and Driver Blog
GM to Shutter Holden Production Operations in Australia by 2018
After a week of media speculation, and amid repeated denials a decision had been taken, the axe was wielded on General Motors’s Australian manufacturing operations Tuesday, with Holden to become an all-import brand from 2018. The decision ultimately spells the end for the Commodore—well, come the end of 2017, once Holden’s facilities in Victoria and South Australia close. The decision also foreshadows the end of local Cruze production, with that model set to be sourced from South Korea. In a statement, outgoing GM CEO Dan Akerson attributed the decision to a “perfect storm” of factors. According to Akerson, the announcement reflected a raft of negative influences for the industry, including the sustained strength of the Australian dollar, a puny and very competitive domestic market, and high cost of production. Earlier this year, Holden chief Mike Devereux had admitted the cost to build a car in Australia was $3750 (harshly $3350 U.S. at today’s exchange rates) more than in other GM factories around the world.
The precise timing of the decision is unclear, but the announcement lends weight to numerous media reports that claimed a decision to close Holden’s production facilities had been taken last week. While a spokesman for Holden reiterated to Car and Driver that a final decision to withdraw wasn’t taken until early this week, it’s likely an informal decision amongst executives in Detroit had already sealed Holden’s fate weeks prior.
While the Australian government has publicly committed to generous industry subsidies in latest years, such support has been contingent on continued investment from the automakers themselves. With the industry’s long lead times necessitating Holden to commit to a multi-million-dollar investment before June of next year if it was to proceed building cars in Australia for another generation, today’s announcement reflects the company’s conviction that viability was not possible with current or projected volumes. A report last week in The Wall Street Journal cited a senior industry representative as telling the company would “not want to put more money in after the current model run winds up in 2016.” Notably, the company’s viability has been hit hard by falling exports in latest years, with only 14,500 cars sent abroad last year, compared to a peak of 60,500 in 2005.
But declining exports haven’t been Holden’s only obstacle. While the company’s domestic sales have not dropped as precipitously as Ford’s—which led the Blue Oval to announce the closure of its own Australian operation earlier this year—Holden has nevertheless suffered from a relentless sales slide over the past decade, driven in part by the market’s shift toward smaller cars, but also by factors such as the reduction of tariffs (making imports more competitive) and a preference by consumers for more-prestigious nameplates.
While Holden as a carmaking operation has always been a wholly GM-owned entity, the decision to shutter its operations has engendered a strong emotional response from those who cling to its status as a local icon. Through sixty five years of local car manufacturing, dating back to the original 48-215 of 1948, GM’s local offshoot has consistently projected itself as “Australia’s own.”
Along with plans for Holden to be a national sales company and parts-distribution center, GM has committed to retaining a global design studio in Australia beyond 2017. It is also understood that around one hundred engineering jobs will be kept.
In the meantime, attention has already turned to Toyota, the only manufacturer still committed to manufacturing in Australia, and the attendant viability of domestic suppliers—many of which depend on both Toyota and Holden to maintain sufficient scale. Toyota said that the decision would “place unprecedented pressure on the local supplier network and our capability to build cars in Australia.” It added the company would work with suppliers, key stakeholders and the government “to determine our next steps and whether we can proceed operating as the foot vehicle manufacturer in Australia.”