By on December 5, 2013

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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.

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64 Comments on “GM Rumored To Be Shuttering Australian Manufacturing Operations In 2016...”


  • avatar
    eamiller

    Whither the Chevy SS?

    • 0 avatar
      APaGttH

      The word has been (but all rumor and speculation) that Zeta production would move to North America and the Caprice PPV and SS would live on.

      I think it is wishful thinking, and I speculate the SS will end in 2016 or maybe a 2016-1/2 / 2017 model.

      The Camaro is going Alpha – unless sales in China of the Buick Park Avenue justify keeping Zeta alive. It’s a dead platform walking – regardless I can’t see GM investing heavily in another update.

      Zeta was a darn good platform – GM certainly screwed up the deployment and marketing in most markets.

      • 0 avatar
        racer-esq.

        GM selling the Caprice PPV at what is likely a loss, to maintain GM’s presence in the pursuit car market, makes me think that a Canadian or US built RWD sedan, that can be sold at a profit, is in the works.

        • 0 avatar
          kjb911

          a few weeks ago I attended the Corvette Stignray Dealer Sales Academy and the SS was there so I started askign questions…unofficially the SS will continue on after 2016 in the us possibly at the Hammtrack plant put no official word and they were quick to divert attention to the vette

          • 0 avatar
            RobertRyan

            I very much doubt it will What has it sold so far? very few cars,this was discussed previously on TTAC.

  • avatar
    VoGo

    I don’t think anyone with knowledge of exchange rates should be surprised by this. To me, the writing on the wall came with the news that the next gen Camaro would be based on the platform for the ATS.

    GM no longer has use for the Aussie RWD platform and manufacturing capability, so shift them to the Malibu, which apparently has some excess capacity.

    • 0 avatar
      Pch101

      Exchange rates are not the issue. They do make things worse, but they aren’t the fundamental problem.

      Australia is a small market. Small markets don’t provide opportunities for scale.

      The only reason that there has been to build cars in Australia was because it was a highly protected market. But now that tariffs and subsidies are in the process of being cut, it makes more sense to build them somewhere else and to import what’s needed.

      • 0 avatar
        RobertRyan

        The only way vehicles are built in the US is a combination of a very protected market and a large customer base. As it is this is not enough and vehicles are being built in even cheaper locations.

        • 0 avatar
          Hummer

          Seems to me bad talking protected markets is becoming jealousy now.
          What first world country has as much manufacturing as the US? (Seriously, I don’t know)
          Not only do we have a ton of production from foreign and domestic companies, but they also export profitably.

          Australia cuts protection and loses tons of jobs, that hurts your economy more than a 2-3k cheaper car that you can do without replacing and a loss of tax revenue.

          Hell the sonic is built in the US, isn’t it the only subcompact built in America in decades?

          • 0 avatar
            mike1dog

            Germany. Germany has a lot of manufacturing. Their system, where the unions are on the board makes it a lot easier to keep manufacturing going there as well as it does.

          • 0 avatar
            Hummer

            I figured that would be in the running.

          • 0 avatar
            RobertRyan

            Germany is the worlds top exporter of manufactured goods and has a very much higher percentage of manufacturers than the US. The US percentage of manufacturing industries is on par with Australia.

    • 0 avatar
      RobertRyan

      @VoGo,
      Correct the artificial exchange rate has been a major issue. Deveraux has commented himself on the problem.
      http://www.goauto.com.au/mellor/mellor.nsf/story2/DF388A9B51FEBB7BCA257B650014F000

  • avatar
    86er

    Much of the analysis that goes around in the modern automotive industry centres on “we must have economies of scale otherwise this product is pointless”.

    Certainly, economies of scale are influencing the rapidly changing situation in Australia where (if I’m not mistaken) the new National Coalition government is backing away from these types of subsidies at the same time that market tastes are evolving closer to, if not Asian, then at least North American trends.

    These leads to me ask “is Zeta dead?” Is the Camaro going to run its course in Oshawa and then GM will exit the sub-premium sport car market? I guess whatever shape the 2015 Mustang will take will inform this somewhat.

    This also leads me to ask about how far can economies of scale be stretched across a global platform? If Chinese, Arab and other customers are buying Zeta platform cars in sufficient numbers, does this amortize the costs such that they could tack the “SS” onto the existing line for the Camaro and continue production?

    • 0 avatar

      Zeta is almost certainly dead, Alpha will underpin the Camaro once it leaves Oshawa for Lansing (where ATS is built) around 2015/2016.

      • 0 avatar
        APaGttH

        What Derek said. As I posted above, I just can’t see GM investing money to keep Zeta going past 2016 with maybe 2017 being the last model year.

        Camaro has already been announced to be going to Alpha – there is no Zeta flagship for US Buick (IMHO that is where the SS should have gone) and unless some miracle happens in China and the Buick Park Avenue starts selling at 8K units a month – it’s a dead platform walking.

    • 0 avatar
      RobertRyan

      There is a Productivity Commission going on many submissions. Ford still wants funding AFTER they shut down local production, I think not.

  • avatar
    Kyree S. Williams

    Well, I can’t say that i didn’t see this coming. Not only are Australian exchange rates very unfavorable, Australian drivers have been shifting to less-traditional vehicles from Asian manufacturers, chiefly Toyota. There’s talk that the next Commodore family will be front-wheel-drive and the next Camaro will be on the Alpha platform, so there goes the necessity for the Australian-engineered Zeta platform. I know that a lot of us enthusiasts—myself included—like to know that these brawny, traditional rear-wheel-drive cars still exist. But GM does not have an exotic brand like Bentley, Rolls-Royce, Ferrari, Aston Martin or even Porsche (most of which use quite a few parts from their parent brands). GM cannot afford to keep manufacturing cars that do not make economic sense. What I will say is that there is a lot of passion in Australian motoring as a whole, and so I hope that GM keeps its engineering operations there…

  • avatar
    betweentheaxles.com.au

    Actually, small thing, the Cruze sedan and hatch are made in Australia. The wagon is fully imported from Korea.

  • avatar
    ash78

    I guess it’s sort of like if Texas were its own country, isolated by thousands of miles of water (this sounds great so far), and had to build their entire garmet segment on cowboy hats. Then 20 years later, all the ranch land has been bought up and there aren’t many real cowboys left and the haberdashers aren’t sure what to do.

    But there is still a bunch of internet dweebs and hipsters in places like NYC and LA thinking “I really want a cowboy hat, but those ones from Texas are kind of expensive and hot and might not look right and besides, the ones from Japan and Thailand are much more efficient and reliable and do pretty much the same thing for less money.”

    And then you have a world full of weak analogs, like those Japanese kids who dress like cowboys or Elvis or whatever and just hang around in a park in Shinjuku and drink beer at noon and make fun of businesspeople and think they’re Hank Hill and Bill Dauterive.

    Where was I going with this? Oh, you all need to watch the Eric Bana movie “Love the Beast.” That is all.

    • 0 avatar

      Comment of the day

      • 0 avatar
        mikey

        Yeah, it is quite witty.
        Though it mot looking good for OZ, we are in Canada have a little advantage. Oshawa is 5 road hours from Detroit.

        As of today your looking at 5 to 6 cents on the dollar. Cheaper health care,and one of the most modern Flex plants in North America.

        The consolidated plant is running on borrowed time. You may even se Cami disappear.
        The Flex plant will be with us for awhile yet.

        I hope.

        • 0 avatar
          RobertRyan

          Canada is in the firing line as well. Although the companies will not admit it.

        • 0 avatar

          They just spent all that money upgrading CAMI to build Theta rather than going to MX or Spring Hill. Why would they pull the plug? I am not so sure Mikey, I think Flex will be shuttered after ’16. There’s nothing there that they can’t build elsewhere (Theta, E2 sedans, Zeta gone).

          • 0 avatar
            Pch101

            Canada and Australia are indeed in different positions.

            Australia has a scale problem that can’t be fixed. In contrast, Ontario is effectively Michigan with a different currency and, for the domestics, a different union. For the auto industry, the border hasn’t existed since the 1960s.

            If the exchange rate is manageable and Mexico doesn’t offer a more enticing alternative, then Canada should continue to have some sort of auto industry (although it could certainly shrink.)

          • 0 avatar

            I don’t see the Honda/Toyota plants in Alliston, Cambridge or Woodstock going anywhere. I don’t think Chrysler’s Windsor or Brampton plants will either, nor Oakville for Ford. Oshawa seems to be the lone trouble spot.

          • 0 avatar
            RobertRyan

            Agreed it does not make sense to build in Canada when many parts of the US are much cheaper. Right now the Automobile companies are hurting and like water are running down the hill to find the lowest point.

          • 0 avatar
            mikey

            Yes Derek, they “upgraded” CAMI. When they built “Flex” they tore it back to the rafters. Every piece of eguipment was brand new. Nothing was salvaged from the old plant. I remember standing there with my hard hat on, looking at the biggest indoor space I’d ever seen.

            We were told at the time it was a true Flex plant. I seem to remember a heated debate here at TTAC. There seemed to be a difference of opinion, on what exatly a Flex plant is. Keep in mind, Flex has its own dedicated stamping plant.

            Perhaps, a little wishfull thinking on my part? Flex will not close in the next decade.

          • 0 avatar
            RobertRyan

            @Mikey,
            “Flex will not close in the next decade.”
            I would not be so sure.Your CAN Dollar is not going well with GM Accounting.

            ” I am not so sure Mikey, I think Flex will be shuttered after ’16.”

            Agreed.

          • 0 avatar
            mikey

            As of 10 mins ago the Loony is six cents behind the Greenback.

            On a real nice day we can see the USA from Oshawa.

            My heart goes out to the GM folks in OZ. That being said, here in the frozen north,were in a whole different position.

            Literally

          • 0 avatar
            RobertRyan

            @Mikey
            “My heart goes out to the GM folks in OZ. That being said, here in the frozen north,were in a whole different position.

            Literally”

            So did we in the GFC. We were GM’s “shining star” while the US/Canadian production was
            prostrate. It does not take much to change the situation.

    • 0 avatar
      rpol35

      “I guess it’s sort of like if Texas were its own country”

      You mean it isn’t?

  • avatar

    GM only understands closing, spinning, shrinking, and excuse making. the corporation should have been allowed to go BK in the traditional sense and the parts dispersed amongst real industry players. this is one very sick company.

    • 0 avatar
      RobertRyan

      Agreed and Ford is actually worse.

    • 0 avatar
      mike978

      Why do you say they are a very sick company? They are, by all accounts, making a rational economic decision. These are legacy plants when they were the undisputed sales leader. Times have changed and some of their manufacturing locations and longer fit.

      I bet they have created new factories in other parts of the world (Brazil, China etc).

      • 0 avatar
        RobertRyan

        “Why do you say they are a very sick company? ”

        Both Ford and GM cannot compete with the Asian competition, they do not have other products from their global stable that sell as well as the locally produced GM and Ford vehicles.
        Not looking good. Toyota has just become bigger as seller here. Hyundai , Mazda are growing in leaps and bounds.

      • 0 avatar

        see market share.

  • avatar
    28-Cars-Later

    should be interesting to see how GM gets out of its Australian bailout agreement to keep production until 2022.

    “This partnership will see GM Holden continue making cars in Australia until at least 2022,” Ms Gillard said.

    http://www.dailytelegraph.com.au/news/national/its-a-big-golden-holden-bailout-as-julia-gillard-comes-to-the-rescue-of-motoring-giant/story-e6freuzr-1226307685399

  • avatar
    Conslaw

    There are increasing signs that oil money is distorting the Canadian economy. The exports keep the currency high which makes manufacturing more expensive. A similar thing is going on in Australia with a variety of minerals. To a lesser degree it’s even happening in the United States with the boom in oil and gas production due to fracking. The problem, is, the wealth created goes disproportionately to those who are asset-rich. Since the average American has virtually no net-worth (and the average Canadian or Australian probably isn’t much different), all Joe Average reaps from this export boom is reduced employment and slightly cheaper imported goods.

    • 0 avatar
      RobertRyan

      Canada has the same problems as Australia, although our Dollar is thankfully starting to drop.

    • 0 avatar
      Onus

      The us should stay stable. Seeing as most reserves are in USD. Everything else is compared to USD as a sort of baseline. This is a huge advantage that Canada and Australia don’t have.

      We still aren’t exporting all the extra natural gas we have so instead local prices are stupid cheap. When we export prices will go up.

      May help the dollar and economy as well. Nothing to complain about there.

  • avatar
    Cammy Corrigan

    Now that Australia has free trade agreements with the United States, Thailand, Japan and now, most recently, South Korea, I think Australia can hold a funeral for their car manufacturing base.

    GM can import cars from South Korea and the United States. Ford can import from Thailand and the United States. And Toyota can import from Japan, the United States and Thailand. I know they still maintain a manufacturing presence in Australia and, hypothetically, they could run it at a loss (They’re number 1 in Australia. Best not annoy your one of your top markets too much). But, I reckon, Toyota won’t like to have too much red ink on their balance sheets and will eventually shut it down.

    I feel for the out of work engineers and other ancillary staff. But you have to take the rough with the smooth when it comes to FTA’s. Also, given the high value of the Australian Dollar, importing cars just makes more sense. Still doesn’t help the out of work staff…

    • 0 avatar
      Pch101

      There is no FTA with Japan. It’s still being negotiated.

      The primary driver of this shift is that the Aussie import tariff is now down to 5%. A 5% tariff isn’t high enough to encourage domestic production (although the luxury car tax makes some European imports quite costly.)

  • avatar
    carguy

    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.

    • 0 avatar
      RobertRyan

      Good in Theory , does not work out that way in practice. Also Australian public has little input into modifying for local tastes.

    • 0 avatar
      pacificpom2

      unfortunately, when you put about 30,000 people out of work that’s probably 10,000 less sales. What you might see is a spike as some people spend their redundancy money, but most of them will save it to clean out their debts. The only winners will be the used car sales people and the purveyors of the less expensive cars, Chery come to mind and some of the cheaper Kia’s and Hyundai’s.

      • 0 avatar
        RobertRyan

        @pacificpom2 I doubt that they will be winners. Ford and Holden (GM) will lose big time in Australia. Like they are already losing in Europe and to a lesser extent in Asia.

  • avatar
    Spike_in_Brisbane

    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.

    • 0 avatar
      Pch101

      The problem is that the smaller, more isolated markets have inherently higher costs, due to the lack of scale.

      This can’t be fixed. The only way to deal with it is to get customers to willingly pay a premium for the location of the assembly point. The Germans can get away with that; the Aussies can’t.

  • avatar
    TMA1

    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.

  • avatar
    Jethrow

    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.


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