By on December 11, 2013


Holden informed the Australian federal and state level governments that it will cease car production in Australia by 2017, citing a “perfect storm” of unfavorable exchange rates, high production costs and a small but competitive car market that has seen sales of traditional Australian-made rear-drive sedans and Utes plummet in recent years. An estimated 3000 workers are said to be directly affected by the closure of Holden’s manufacturing facilities.

The news delivered a crushing blow to an industry still reeling from Ford’s departure earlier this year. Shortly afterwards, Holden appeared to re-affirm its commitment to Australia, but now it appears to be for naught. In a prepared statement, outgoing GM boss Dan Akerson said

“We are completely dedicated to strengthening our global operations while meeting the needs of our customers.

The decision to end manufacturing in Australia reflects the perfect storm of negative influences the automotive industry faces in the country, including the sustained strength of the Australian dollar, high cost of production, small domestic market and arguably the most competitive and fragmented auto market in the world.”

Long-time TTAC readers will be familiar with our extensive coverage of Holden’s on-again off-again manufacturing decision. At first, there was said to be two new global sedans, including a new Commodore (said to be based on the front-drive Epsilon II architecture), with Holden boss Mike Devereux publicly committing to building a new Commodore in Australia at the launch of the most recent generation.

Just as TTAC predicted, Holden will become a “national sales company”, presumably importing GM cars made in Korea, Thailand and even China.  The Thai built Colorado and Korean built Cruze and Malibu will comprise the future of Holden’s lineup, as demand for the Commodore and Ute has fallen consistently. In addition to the aforementioned factors, the end of protectionist tariffs on imported cars is also cited by many as the downfall of the traditional Australian car, with consumers opting en masse for Thai-built trucks and more fuel efficient Japanese, Korean and European vehicles.

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32 Comments on “Holden To End Australian Manufacturing By 2017, Transition To “Sales Company”...”

  • avatar

    Two simmering questions on my mind in relation to this breaking news:

    How is Holden/GM getting out of the 2012 Australian bailout agreement?

    How does this affect the Labour party in Australia?

    • 0 avatar

      I would presume that this won’t be great for the conservative Coalition in South Australia, since that’s where the jobs are.

      (Incidentally, it’s the Labor party — they use the American spelling for the political party.)

      • 0 avatar

        Ah I had assumed they used the British spelling, my mistake. Interesting so Labor makes a deal, loses the election, and now the Coalition is left holding the bag when the deal falls through. The aftermath will be worth watching. The icing on the cake is the outgoing CEO of GM made the call, so the incoming one has clean hands over the affair.

        Looks like many Aussies will be effected:

        “The Australian Manufacturing Workers Union said Holden’s withdrawal will lead to 50,000 job losses and a $21 billion hole punched in the economy.

        “It’s now highly likely that Toyota will leave Australia. In fact it’s almost certain,” AMWU national vehicles division secretary Dave Smith told reporters outside Holden’s head office in Melbourne.”

        • 0 avatar

          When Aussie conservatives (which, confusingly enough for us includes the Liberal party) argued for tariff reduction, they claimed that the domestics would be able to compete by exporting cars.

          The right has obviously been proven wrong. The world isn’t particularly interested in Aussie cars, and we can assume Toyota isn’t going to hang around for much longer, which will leave them with no auto production at all.

          But does this really matter to most of the population, which is now benefiting from lower car prices and more choice? I doubt it — the consumer who isn’t employed by the auto industry is personally better off than they were with the Falcon/Commodore duopoly.

          • 0 avatar

            So the free market wins I suppose. Do you happen to know anything about the Malaysian auto industry? I thought I once read they operated a similar protectionist system as Australia did.

          • 0 avatar

            Aussie car manufacture retreated to the more-profitable large cars and that market has declined globally.

            28-days – Malaysia has an import tariff in the region of 70-200% afaik

        • 0 avatar

          Anyone know anything about Toyota investments in manufacturing in Australia? I was thinking they just put a couple dozen million in for 2AR-FE manufacturing for the Aussie Camry…

  • avatar
    Ron B.

    Holden was set up in the years following WW2 by Sir Laurence Hartnett and it’s been suckling on the taxpayers tit ever since. It has done nothing for Australia apart from provide a few production jobs and sell some really mediocre cars,most of which were either designed overseas or were derivations of badge engineered european (Opel,Vauhall) and japanese (Isuzu,Suzuki ) cheap cars. Unlike GM USA ,GMH was simply a branch office type operation with no real creative input which would single it out as an engineering design leader. Ford is exactly the same .
    Most us tax payers here were getting pretty sick of the labor party giving them millions upon millions and we got nothing to show for it. They even tried dumping Opels on us earlier this year in a seriously flawed example of pitiful marketing.
    Chrysler were doing the corperate grovel for years and recieved a lot of money,only to sell out to mitsubishi who then decied the Auatralian worker wasn’t worth the high labour cost and shut down their operations. They are selling more cars than ever now,all imported from Japan.
    Wen a new car buyer can go out and buy a Kia or Hyundai cheaper and of better quality than any holden Commkodore,it was easy to see the writing on the wall.
    It’s not only the 3000 plant workers who will finish up in 2017,there are also 40,000 indirect jobs affected.
    Finally,to answer one question,how does the labor party feel? they dont give a damn. it is the coalition parties who look after the wage earner.
    labor (google Craig Thompson) would rather collect union fees and live off the superannuation funds than get involved in the humdrum lives of the wage slaves of Australia and it is their policies which have destroyed most of Australias industrial Enterprises. Given the tyneside accents of a few of the labor apparatchiks ,it’s little wonder .

    • 0 avatar

      You’re kidding, right?

      Holden is a very heavy force in the GM Design world, helping with a large majortity of the RWD projects (Alpha – Caddilac products, Zeta – Commodore and Camaro). Ford AU engineered the Ranger which is sold worldwide (expect US) and on other projects like the Figo (updated previous model Fiesta for 3rd world markets).

      You’re right in saying that the majority of their cars are derivative of GM’s other cars, but if you’re saying that the Commodore (pre-Zeta) was just a mere derivative of the equivalent Opel, you’re clearly mistaken. The Opel Omega barely shares anything with the same Holden of the time. It’s widened, toughened, has unique sheet metal (doors are about it) and had completely different engines.

      Nothing to show for it? We got cars, we got an jobs, we got cars that are tailor made for our unique conditions. What about the ~$21b billion dollars that we’re about to loose from our economy, and all the job losses? The strain on welfare alone is going to run us into recession.

      Other countries (EVEN GERMANY FOR CHIRST SAKE!) subsidise their auto industries –
      you’re telling me this was a bad investment?

      “Holden said it generated $32.7 billion in economic activity in Australia from 2001 to 2012 and received $1.8 billion in assistance over the same period, a result it considered a good return on government investment.”

      If we didn’t have a stupid obsession with one sided Free Trade Agreements, a crazy exchange rate and kept import tariffs, Holden would’ve had half a chance, putting aside crazy labour costs.

      Of course, Holden is still partly to blame – as I said, the labour costs are crazy (apparently line workers making $100k p/a isn’t uncommon…) and if VE/VF was smaller, more efficent and more aligned with the times, it could’ve been a different story. The VF is a great product, praised to no end by the media, selling pretty well for a large car market that’s been cannibalised by the SUV market. Together with the Cruze, Elizabeth pumped out 82,000 cars lat year, even with a 6 year old model in production.

      Give me a break. Coalition doesn’t care about the wage earner. Otherwise they wouldn’t be back flipping on education, they wouldn’t be cutting the low income superannuation incentives and they certainlly don’t care about helping the automakers and the 50,000 jobs involved. The stupid soundbyte of “our automakers need to export to be profitable or we won’t help!” clearly shows that Abbott either has no idea exchange rate problems that makes this impossible, or (more likely) he doesn’t care about them and doesn’t want to do anything.

      Mitsubishi left because they weren’t making the right car – if they had made the Lancer in Australia they would’ve had a chance, but the 380 was just the wrong car at the wrong time. Pretty ungainly and bloated looking, which didn’t really help being that the Magna had a reputation as old persons car. They didn’t export it which didn’t help it all – they used to sell Magnas as Diamantes and send them back to Japan which helped keep the bottom line boosted.

  • avatar

    Didn’t Holden get rebadged as the GTO in the States during the mid 2000’s? or am I wrong on that?

  • avatar

    Heh. So Bon Jovi just happen to be performing about 15 1/2 miles from Holden’s Elizabeth plant on the night of this news. Their stage decoration is the giant front end of a ’59 Electra. A huge edifice celebrating GM at the height of its power might not strike the tone they’re looking for in this particular circumstance…

  • avatar

    Very sad day as a Holden fan but it isn’t really surprising. I just hope GM builds right hand drive versions of the next model Corvette, Camaro and the Cadillac range. Have there been any rumours on GM building a replacement for the Chev SS (AKA our VF Commodore), but built in the US in a few years time?

    • 0 avatar

      @Monaro I would say it is a really good day for Holden fans. Holden is currently losing money assembling cars in Australia. These loses lead to less money for research, development and products. The Cruze is currently at a $3000 price disadvantage to the Mazda 3. If Holden can import from low cost countries they are no longer at a price disadvantage, they can better compete on price and allocate more money for product development.

      Holden will still manage sales and design. GM will export the Cruze, Malibu, Trax and Sonic from Korea. The Captiva and Colorado will come from Thailand. They will be cheaper and the money saved assembling will go into the products to make them better. Cheaper and better will sell irrespective of where it is made cause nobody gives two sh&^s anymore.

      The Commodore will be vastly superior too. Holden can design the car and GM will build it on the Alpha platform in Michigan. Fuel economy is already a concern in Australia. At 3500 pounds, an Alpha Commodore could easily be equipped with the 2.5L as a base engine (The 3800 lbs Impala and 3900 lbs Equinox have the same base engine). The 2.0L turbo, 3.6 V6 and V8 will be optional engines. Aussies love their RWD Sedans. A fuel efficient, advanced RWD sedan is going to set the market on fire. Again by consolidating all RWD cars to one platform and one assembly location, GM can save a lot of money and when they have money to play, you get products like the 2014 Imapala, 2015 Colorado, 2014 CTS and the Stingray!!

  • avatar

    NAFTA doesn’t required cars to be built in NAFTA. The us has a 2.5% tariff on cars which is nothing but, we still manage to have nearly all our cars built locally. It just makes more sense with such a large market irrespective of tariffs.

    • 0 avatar

      @RobertRyan – You can try to spin it any way you want, but the only REAL barrier is the low, low price of non luxury cars and trucks, for sale in the US. Prices are extremely competitive and crazy low, compared to any other meaningful market. Now that does entice offshore OEMs offering entry level and mid market autos to build their cars and trucks in the US (and Mexico), along with cheap wages and favourable exchange rates. Otherwise, can you name a meaningful market that’s as free and open to import cars and trucks than the US?

      • 0 avatar

        @RobertRyan – I’ll put it yet another way, since you keep sidestepping the question: Name a meaningful market that sells cars as cheap with so little margin as the US. Then name a meaningful market that’s as free and wide open to import cars and trucks as the US. This should be too easy with statements like: “one of the most protected Automobile markets in the world” and “NAFTA trade block”.

        The US is a tough, highly competitive and very unforgiving automotive market for entry level to mid market. Not very appealing to offshore OEMs. This means OEMs have to move a lot of cars and trucks before even thinking about turning a profit. Yes tough for domestic D3 automakers too.
        There’s better places for offshore OEMs to sell cars, other than their home markets.

  • avatar
    el scotto

    Is the Australian govt doing anything for the workers who lost their jobs?

  • avatar

    Lesson learned for US politicians should the chicken tax ever come up for revocation.

    • 0 avatar

      The chicken tax will effectively be history if/when the EU and Transpacific free trade agreements are negotiated and implemented. (The tax will still be on the books, but it won’t apply to any nation that could export trucks to the US.)

      In any case, it already does little or nothing as is. Full size trucks don’t exist outside of NAFTA to import, the small truck market is already saturated with product, and it’s always possible to use knock-down kits to avoid the tax. As far as tariffs go, it is next to irrelevant.

      The Aussie tariffs did a fine job of reducing competition, but they did so at high cost. The business was heavily subsidized, car prices were high and the competitiveness of the vehicles was questionable. With lower tariffs, they’re getting more variety at lower prices (although the prices are still high by US standards.)

      • 0 avatar

        Agreed that fullsize trucks are a NA thing, with limited appeal in Australia or the Middle East. My thinking is more along the lines of cheap labor/materials offshore and exporting into the US. Basically what mahindra was supposedly doing for small trucks.

        Not a probability, but a distinct possibility. Especially for Chinese cheap trucks if they get ambitious.

        • 0 avatar

          There isn’t much indication that there is a market for cheap small trucks anymore. The average transaction price of a full-size truck is about $40,000, even though the base models carry MSRP’s in the 20’s and the average passenger car sells in the low 30’s.

          These days, the market demands safety equipment, horsepower and creature comforts that add weight, reduce fuel economy and increase costs. Betting on a mini truck revival would be gambling at best, and sales would surely be on the wrong side of 100,000 units per annum, which makes it hard to justify.

      • 0 avatar

        “has equally high labor costs”

        No, it doesn’t. American autoworkers make less, on average, then autoworkers in pretty much every other first world country.

        “has very high barriers to competition.”

        Such as? The United States imports an enormous number of cars, especially compared to other mature markets. All of the world’s top automakers don’t seem to have a problem selling cars on the American market, at prices considerably lower than elsewhere.

      • 0 avatar

        Do you mean the before or after tax price of cars because car taxes will explode as not car producing countries have much higher car taxes than car producing countries.

    • 0 avatar

      The chicken tax is irrelevant. The Tundra and Titan don’t make a good case for foreign pickups. The midsize market is owned by the Tacoma. If anything the van segment might heat up, but it’s already poised to do so.

  • avatar

    The only Holden I drove was a V6 Pontiac G8 when they were closing Pontiac. It was a nice car at the blow-out price of $24K CDN (par with US at the time) but, at the list-price of $37K, not so much.

  • avatar

    I think in the US and North America, we tend to view Holden with rose-tinted spectacles, seeing it as a lovable All-Aussie underdog that makes precious V8 Muscle cars and El Caminos.

    The reality may be a bit different. Think GM circa 2007/8.

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