GM Looking To Shutter Holden, Re-Brand As Chevrolet After 2017
With the demise of Holden’s manufacturing and R&D facilities complete by 2017, General Motors is reportedly looking to kill off the Holden brand and switch over to Chevrolet instead.
According to Australia’s News Corp, the plan to shutter Holden has been around since the early days of the financial crisis, when GM wanted to kill it off along with Pontiac and Hummer. Only fierce resistance from Mark Reuss, who once headed up Holden, led to the brand being given a stay of execution.
Outgoing Holden boss Mike Devereux told News Corp that
“Holden is here to stay. Holden has been a part of Australia’s past … and it will part of its future for decades to come. Holden is one of the most valuable brands in Australia. We are committed to the brand for the long term. The brand is going to be a part of the fabric of this country for a very long time.”
But with Devereux scheduled to leave Holden for GM’s regional operations in Shanghai starting in February, 2014, Holden will lose another potential guardian.
GM insiders feel that with Holden becoming solely an importer of vehicles, there is nothing distinct about the brand, and it makes little sense to retain it. By contrast, introducing Chevrolet would allow for GM’s Australia division to take advantage of marketing efforts like the sponsorship deal with Manchester United, and avoid any negative backlash against Holden that would arise from shutting down its Australian factories.
Holden is also seen by some as having an image problem, too closely linked to Australia Rules football and other “bogan” pursuits. As part of its continued survival, Holden agreed to market the Volt as its own product, despite the fact that it is a major money-loser and sells in negligible volumes due to its high price and poor interior packaging.
Holden insiders told News Corp that “The amount of money we’ve spent trying to defend the Holden brand to Detroit is ridiculous,” but GM executives would counter their work with photos of Holden Utes retrofitted with Chevrolet badges as proof of Holdens irrelevance.
On the retail front, re-branding dealerships would cost between $500,000 and $1,000,000 AUD, with dealers picking up half the tab. Any dealer that did not comply would risk losing their franchise.
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Chevrolet will sell over 5,000,000 vehicles globally in 2013, a new Chevrolet sold every 9.5 seconds, 24/7-365, on average. The brand is helping GM achieve 9%+ margins in NA which gives them great financial strength to build the brand. Holden sold 114,000 vehicles in 2012, 82,000 of them produced in country. With another 13,800 exported, total Holden production was 96,000. The tally for 2013 is not likely to be larger. That is half the size of the Chevrolet volume in Europe that GM is walking away from. GM lost $153M (Aus.) on those Holden sales (-$1,340/car). From a business perspective, GM would have been better off to shutter Holden altogether. With that said, Holden still has more brand equity than Chevrolet in Oz and NZ. If I were a betting man, I'd bet the brand name will continue, as they have announced, as a national sales company. Toyota has already issued an ominous press release indicating that this Holden decision may put insurmountable pressure on their Australian production operations. Scale is everything in the car business. Australia is just too small a market to provide adequate scale to compete with other manufacturing locations. I can't help but wonder what the Aussies foresee will exist when ALL of their manufacturing disappears, as appears inevitable with today's business realities and their government policies.
Seeing that they are even going to cull the R & D side of Holden. Any imported vehicles will no longer gain the benefit of local tuning. Now we will really get to see how well(tic) imported vehicles handle. Will we get wallowy marshmallow rides for various imported chev's . Will the Daewoo's fall apart on the first drive in the bush? How about when Joe blow hooks up the 6x4 with 500kg of dirt and drags the bum of the car off the rest of the body? One other thing, will the US government , at the behest of the car manufacturers, pressure Australia to go LHD? Just think about it. No need to waste all that engineering effort to turn LHD to RHD. We promise that cars will be cheaper. Cheaper interiors, build quality, etc..