By on March 22, 2012

 

General Motors announced a $1 billion investment in their Australian operations, along with a contribution of $285 million by the Australian government at the state and federal levels.

Prime Minister Julia Gillard said that they are committed to keeping Holden’s plants running until 2022. Ford and Holden’s Australian divisions are all cutting jobs amid a declining auto industry in Australia. GM cut 140 jobs from its Adelaide plant, while Toyota plans on cutting 350 jobs in Australia. The funding is expected to secure roughly 12,000 jobs at two GM plants while also securing thousands of supplier jobs.

Australia produced 400,000 cars in 2004, but in 2010 it produced just 250,000. The Australian government has been eager to help the auto industry since Mitsubishi shut down their Australian operations in 2008. Analysts have pegged Australia’s government funding to the industry at about $500 million per year since 2001, and the government is slated to continue the subsidies until 2020.  Opposition parties have accused the industry of being totally reliant on government assistance, and some feel that a perpetual appetite for taxpayer funds, especially for an industry that produces increasingly irrelevant vehicles (anecdotal evidence suggests that most Commodores, Falcons etc are bought by government and private fleets) and exports little is becoming unsustainable. The Mazda3 replaced the venerable Holden Commodore as Australia’s best selling car in 2011, with the Holden Cruze nipping at its heels in 2012.

 

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24 Comments on “General Motors Invests $1 Billion In Australian Division, Government Contributes $285 Million...”


  • avatar
    Athos Nobile

    Unless you’re talking US$, local news says its AU$275M

    “General Motors Holden today committed to investing more than $1 billion in local manufacturing to secure its Victorian and South Australian-based operations until at least 2022 following a $275 million government injection.

    The government subsidies – $225 million from the federal government and $50 million from the South Australian government – will be matched by at least $1 billion from Holden’s US-based parent company, General Motors.”

  • avatar
    APaGttH

    Dear General Motors.

    Ditch the FWD Impala.

    Ditch the coming Canyon/Colorado.

    PLEASE give us a ZF Commodore based Impala and sportwagon. You even have a CNG version you sell in Aussieland. Bring it here.

    Instead of the Colorado/Canyon no one wants, give us an El Camino.

    Take the ZF Statesman longer wheelbase version and give Buick a worthy RWD Q-Ship with the awesome quiet parts, and warp speed under the right foot.

    PUH-LEASE!

    I mean on the other hand I have enjoyed 3 years of G8 ownership and about 18% depreciation – so keeping the 4-door Zetas rare in North America has some perks.

    • 0 avatar
      Athos Nobile

      What ZF are you talking about? CNG?…

      What’s coming is VF and they’ve already launched a new LPG system down here.

    • 0 avatar
      Ooshley

      Dear Hypno Toad,

      Roll back the clock and tell me if you would have been willing to pay 25% more for that G8, in 08/09 the exchange rate fluctuated around 0.8:1 USD:AUD, now it is consistent above 1:1.

  • avatar
    outback_ute

    I think the manufacturing of the vehicles can be made profitable – near the end Mitsubishi had a break-even point of 10,000 units from memory, but they must be global vehicles to justify not only the design but enough resources to remain competitive.

    From a holistic point of view, either we are happy to see our manufacturing capability – and many other associated areas such as design – disappear or we are not, in which case we must accept that government support is necessary to compete with companies in other countries that receive such support. I put myself in the latter category. To paraphrase a comment I read a couple of days ago, if we simply let value-adding industries disappear, where will our children get jobs in 10 or 20 years?

    • 0 avatar
      Ooshley

      Despite being further towards the ‘economic rationalist’ pov I have some sympathy for you argument. But only since Holden finally began building a car (the Cruze) that meets the needs of the wider market and is a truly global model. Having the Govt propping them up at both ends of the chain (production and fleet sales) to build an increasingly unpopular model was sheer madness.

      • 0 avatar
        grinchsmate

        I will agree with you that Holden has way too much government support. I also think building the Cruze is a great move by Holden. What i dont accept is all these people saying that Holden should stop building the Commodore, that no one wants a large car and the Commodore is on a road to nowhere.

        Last year the Commodre was the 2nd best selling vehicle, for 15 years before that it was the best. Even the Falcon didnt do that badly. If youre willing to add the territory numbers to it came in at 6th.

    • 0 avatar
      Athos Nobile

      “I put myself in the latter category.”

      X over 9000!!!!, just have a look at the Germans, they’re still a manufacturing and design powerhouse.

      “if we simply let value-adding industries disappear, where will our children get jobs in 10 or 20 years?”

      As a recent migrant into this beautiful country, it makes me very sad when I read the vitriol that goes in the local papers (specially in the comments sections) for anything manufacturing related. The bashing against Oz built cars and owners is even worse.

      The spin says our children will work in IT, banking or “services” (whatever that means). All that can be outsourced, Melbourne’s recently fired workers can attest to that.

      I know it is not much, but as far as I can, I try to buy local made products, even if they’re 2-3$ more expensive than the “made in you know where”.

      • 0 avatar
        outback_ute

        Ooshley – the VE was supposed to be a global model, or at least offered in more forms in the US. When that fell in a heap it was too late in development to cut things, for example I understand the wagon version only went ahead because it was to be sold there. The car industry is particularly difficult due to the product lead times – back in the early 2000′s when the decision on VE was made sales were much higher. Should they have seen things would change to such an extent? Yes in a perfect world, and they undoubtedly lost money on some of the VX-VZ era offshoots too.

        Athos – agree, there have been a lot of white-collar jobs lost from the ranks of the people who argue against this type of government support. We can’t all have jobs selling each other stuff made in China – people will just buy it online!

  • avatar
    GS650G

    So nice to see our tax dollars going to Australia. Where are all those people so proud that we saved American jobs here at home?

    • 0 avatar
      Beerboy12

      Holden’s success is good for GM, GM’s success is good for the American economy and that is good for Americans and any way the tax dollars seem to have done the trick so… quite the whining because that whole tax dollar for bail out complaining is getting really old.

      • 0 avatar
        Pch101

        “Holden’s success is good for GM”

        In the scheme of things, Holden is barely relevant to GM.

        GM and Ford would probably be better off if they just closed their Aussie factories and confined themselves to selling imports there.

        In a global economy, the market is too small to cater specifically to it. And in any case, if the Falcon and Commodore are no longer going to dominate the local market, then it makes increasingly less sense to make them at all.

        Since the Aussies now seem inclined to buy the same compacts that everyone else is buying, the market can be served by compacts that can be built anywhere, so they may as well import them. The import tariffs are being phased out, which provides even less reason to build them there.

    • 0 avatar
      outback_ute

      GS650G the government in this case is the Australian government – unless I have misread you? (edit – ok, via US govt ownership of GM – at least in that case they are doing it because they think there is money to be made!)

  • avatar
    TonyJZX

    i’m generally against corporate welfare but this seems to be a good deal… $27.5 mil. per year for 10 yrs… its not bad to prop up 350,000 odd jobs

    however in the grand scheme of things… they also gave money to toyota and ford

    and when they gave it to mitsubishi also on a 5yr plan, mitsubishi couldn’t hold up their end of the bargain and skipped the country… to their credit they paid the government back

  • avatar
    Beerboy12

    Australians are generally really proud of their Holden brand so it’s great to see GM getting behind it. That is after all, about the only way GM will succeed in Australia. Now I wish that GM would put more effort into Opel.

  • avatar
    Dr.Nick

    Australian car production is an anachronism of a time just passed. The Australians can now live by selling their copious natural resources to a rapacious Chinese and Southeast Asian market. They are essentially the same as a Gulf oil producing state. There is no benefit to paying extremely high Australian wages in order to produce Australian domestic market vehicles that can’t be exported anywhere because of the high costs of production. This announcement is a time saving measure before the winding down of the business commences.

    And for everyone calling for these Australicars to be imported here, just stop it. 10 people want large RWD cars, and they rest of us are the ones not buying the 300, Charger and G8 when it was out.

    • 0 avatar
      outback_ute

      “The Australians can now live by selling their copious natural resources to a rapacious Chinese and Southeast Asian market. They are essentially the same as a Gulf oil producing state.”

      Hardly – mining comprises approx 10% of GDP in Australia and provides 2% of the employment. Do you think the $AUD will be as high as it is forever?

  • avatar
    chicagoland

    Most of the gearheads who “swear that they’ll buy a new RWD big car” complain about new car prices. So, end up waiting for a beat up used one. Then whine when sales tank, saying ‘they have a moral obligaton to keep making my favorite car’!.

    G8 came here, fan boys said ‘whoah, too much $’, waited for huge rebates, and then complain when Pontiac was dropped. Did they forget GM went bankrupt from all the giveaways?

    Or, the ‘bring back old style cars, Detroit would dominate market!’ New Dodge Challenger comes, and all the old timers who wanted one got it first year, but now?

    • 0 avatar
      ajla

      So the successes of the CTS (has sold better than every generation of the FWD Seville) and Camaro (sales still rising and on pace for its best year since 1997) means what?

      And, the Challenger figures for 2010 and 2011 are the 2nd and 3rd best sales numbers the nameplate ever turned in. Sales in 2012 are up 8% YTD.

    • 0 avatar
      28-cars-later

      CTS outselling Seville wasn’t a difficult feat since most of the brand at this point are CTS and variants, and since Cadillac has had declining sales every year since 1990 (258K units, by 96 it was 174K). They also more or less abandoned Seville/Eldorado after the 92-97 gen.

      There is a definite market for midsize-fullsize RWD, if GM didn’t think so they would not have brought over the Caprice PPV at all after the G8 fiasco. I take your point about people wanting to pick them up secondhand, the real question is how big is this overall market, and how many new sales will it generate annually? Camaro is a pony car and the CTS is a small/midsize BMW fighter, neither qualifies as a classic Panther/Caprice type design, the closest thing currently on the market would be the Chrysler 300 twins. I think if they really tried, they could come up something world class… a Chevy model to compete with 300/Charger and a Cadillac model to compete with Lexus LS460/Benz S Class/BMW 7 Series.

  • avatar
    Mark45

    Sounds like a better deal than Tennessee made with VW. They paid $577 million for a $1 billion plant.


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