GM Rumored To Be Shuttering Australian Manufacturing Operations In 2016
Reports out of Australia claim that GM will be ending Australian vehicle production by 2016, turning Holden into a brand that sells imported cars, rather than locally produced vehicles.
Holden has been relying on government assistance from previous administrations, but the current right-leaning coalition is said to be wavering on any new funding. Meanwhile, GM is said to have come to a final decision regardless of what the government decides.
While the official announcement won’t come until early 2014, it appears to have been a long time coming. High labor costs, declining market share, lower tarrifs on imported vehicles and changing market tastes have all led to a decline in popularity for domestic Australian vehicles like large, rear-drive sedans and Ute pickup trucks, the kind made by Holden and Ford’s now defunct Australian arm.
Imports of Thai-built mid-size pickups and small cars built in South Korea, Japan and elsewhere have taken a bite out of Holden sales. The Commodore, once Australia’s best-selling car, can now barely crack the top 10, despite an acclaimed redesign. Models like the Cruze and Colorado are currently imported from South Korea and Thailand respectively, as local production has been deemed too expensive to be profitable.
The 2016 date is also the expiration for GM’s agreement with the Canadian government over maintaining minimum production levels in Canada. Previous TTAC reports have suggested that Oshawa may be the next plant to go, and given the similarities between Australia and Canada’s economies and automotive sectors, don’t be surprised if GM delivers a one-two punch to both countries.
More by Derek Kreindler
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This has been inevitable for some time. A country with 20 million people simply isn't enough to support a car industry unless you export in serious numbers. Given the dollar and labor costs in Australia that was never really possible However, don't mourn the passing of Aussie car making too much - removing the rest of the tariff and signing FTAs with its major trading partners will make cars more affordable for the Australian public.
The whole "Economy of scale" thing intrigues me. Fifty years ago when shipping costs were high and building a car was a complicated process it made sense for small markets to design and build their own cars. Today we have global car manufacturing overcapacity and a car can be built quickly and cheaply thanks to automation. The result is that the lowest common denominator vehicle (Camry, Versa, fusion etc) can be built in the millions. But do we all want one? Is it inevitable that something 'different' like Ferrari or Spyker or Fisker must cost hundreds of thousands of dollars? I desperately hope that programmable robotics, modern software, 3D printing and common use of some parts will lead some manufacturers to be profitable with smaller runs of niche vehicles for a worldwide market. Relaxation of compliance issues would certainly help. My fingers are crossed.
I was just watching Korean TV news - Australian tariffs on Korean autos are supposed to end as soon as the FTA goes into affect in 2015. Another blow to their domestic industry.
As an aussie, I hoped this day would not come. I know you yankies are spoiled for car choice, but where else can I buy a large RWD V8 sedan for reasonable money like the Commodore (or its Ford equivalent, the Falcon). I know you guys are happy to suck up to FWD, but it aint me. But alas, I am in the minority. But let's also be clear on why Holden will go. It is only because GM wants it to go. The plant could work, without governement assistance very easily. All it need do is a wage restructure, and pay the workers market prices, not twice market prices. The means are there, but not the will. It is like the Aussie airline Qantas. Currently losing money compared to Virgin Australia. Biggest difference is the unions at Qantas (like those at Holden) have managed to blackmail such high wages from management that the business is dying. The average wage at Qantas is nearly twice that of Virgins. There is a very sad day looming. And note to GM. No way in hell will I ever buy a Cruze/Malibu/Impala as a replacement for a Commodore. You might as well pull out of Australia as well as Europe.