Australian Cruze Expensive, Unnecessary

The Australian federal government has hopped on the auto bailout bandwagon, “investing” $149m in production of a Holden-badged GM compact car. The South Australia state government will kick in $30m as well, as the Delta-platformed Cruze-alike will be produced near Adelaide. Styling and engineering will be carried out in Melbourne. And what do the Australian people get for their representatives’ fiscal abandon? According to Adelaide Now, the project will “support” 600 GM jobs and 600 supplier jobs, but it seems that these will likely not be new hires. Money for the project comes from Australia’s “Green Car Innovation Fund,” and its use is being justified by the possibility of ethanol, LPG and CNG powertrains at some indeterminate point in the future. “We recognise the needs and desires of motorists are evolving with growing concern around environmental factors and shifting consumer sentiment,” says Holden Chairman Mark Reuss. “Such evolution calls for an innovative approach… (and) the new vehicle will cater for growing demand for smaller cars focussed on economy.” when all is said and done though, the environmental issues are simply a greenwash for Australia to prop up weakening production and subsidize a “domestic” Corolla competitor. Sound familiar? The irony is that the GM doesn’t especially need a bespoke version of its global Cruze for Australia, although it will be required to match the government’s $149m outlay.

With the government picking up half the development cost it’s worth doing, but besides competing in Australia’s brutal small-car market there’s no real upside to the project. The alt-fuel talk is window dressing, there’s no chance of an export niche version, and GM is already ramping up to produce the Cruze in Europe, The US and Korea. There’s no good business reason to not import Cruzes from Korea… except for government “job-supporting” and green posturing. Sounds worth it.