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Holden's VE Ute export deal could be close as GM ramps up Aussie production
5 Sep 2007
HOLDEN has factored a major new export program – believed to be the new VE Ute – into its production plans at its manufacturing plant at Elizabeth in South Australia.
General Motors Asia Pacific president Nick Reilly yesterday confirmed that the Australian production plan included export models that had not yet been announced, before referring to multiple US export models.
At this stage, Holden has only announced it will export the VE Commodore to the US to be sold as the Pontiac G8.
The just-released VE Ute is expected to follow and left-hand-drive versions are currently being tested in the US.
In Australia for the APEC conference this week, Mr Reilly said Holden planned to increase annual production at Elizabeth to 147,000 from next month, which would take the plant to full capacity.
When asked by GoAuto if that number would come to include Ute exports to the US, Mr Reilly replied: “Part of the reason we are getting to max capacity is the increased US volume.”
Mr Reilly said that would not necessarily mean going to a third shift at its South Australian operation.
“With our projections on the various vehicles we may or may not sell in the US, we think we can produce that at Elizabeth with two shifts, with a bit of overtime right now,” he said.
“If they start to sell much better than we anticipated, then we would have to look at doing something else and clearly a third shift would be a possibility, but the products going into that market, the range of sale is quite big.”
The reference to more than one US model and the fact another model has been factored in to the Australian production plan gives hope that a VE Ute plan has been approved. However, Mr Reilly was not about to confirm that yesterday.
“We haven’t necessarily announced all the programs we have planned at the moment,” he said.
The latest information on the US Ute plan comes after General Motors’ global product chief Bob Lutz last week confirmed the VE Ute was under consideration.
Left: Pontiac G8.
According to gminsidenews.com, in response to a member’s emailed suggestion that the Ute should adopt more of a Chevrolet look if it is sold in the US, Mr Lutz said: “Well, that’s what we want to do, but it won’t be a Chevrolet.”
That still leaves the possibility of the Ute being sold as a Pontiac, with the same front-end styling as the G8 sedan. Alternatively, it could be sold as a GMC – a spiritual successor to the Sprint, which was a rebadged version of the old Chevy El Camino.
While not confirming the Ute export program, Mr Reilly did say GM believed the VE Ute would not be hit with the 25 per cent import duty that applies to pick-up trucks in the US.
Mr Reilly was upbeat about the future of Holden, and especially its renewed focus on exports, stating the company was bouncing back after a significant realignment of its business model as domestic sales of large cars slid. This included investment in its South Australian plant and 600 job cuts this March, all aimed at improving its production efficiency.
He said Holden also had to rely more on imported models and increase its own exports to counter reduced domestic sales.
“Its old model of business was to produce the majority of what it sold, particularly in the large-car segment where it has held a leadership position … but that segment is now much smaller than it was and consequently Holden had to restructure and has had to remodel its business,” he said.
“The model now has changed into one where 50 per cent of Holden production will be exported, but a significant amount of our sales in Australia will be imported. So we have got a different model mix and we have had to make some changes in order to make ourselves profitable.”
Mr Reilly said he expected Elizabeth and Holden’s Port Melbourne engine plant to run at full capacity for several years.
“I’m glad to say that after a couple of quite difficult years of restructuring, the outlook is very good, it is very much brighter than it has been for the last couple of years,” he said. “After what was quite a difficult time for everybody in Holden to go through that restructuring, to look at how we compete in a new world, I am happy to report that we are much better placed now financially as well as production-wise and sales-wise.”
Mr Reilly said the Elizabeth plant was now in the top 10 to 15 per cent of GM factories globally (discounting wages), whereas it had been below average before the latest restructure.
Despite this, Mr Reilly said the strength of the Australian dollar and the impact it was having on export revenue meant Holden must continue to cut costs.
“We are not expecting that the Australian dollar is going to weaken much from the position it has got to. We have to keep the pressure on our productivity gains in manufacturing in order to sell into export markets. They have done a great job, but the job is not finished yet,” he said. He said Holden would now concentrate on regaining some domestic sales and called on Australian dealers to adapt to the new range of imported models.
“We have lost a bit of market share because of this segment shift, which we want to get back and clearly we have to get used to selling a somewhat different mix to what we have done in the past,” he said.
Mr Reilly said GM Daewoo-sourced Holdens had done well in Australia, but said there was still room for improvement, especially when it came to the Viva small car.
“That model is due for replacement in the not-too-distant future … I think that will perform better in that segment,” he said.
Mr Reilly confirmed the next-generation Viva would be built on a platform developed by GM Daewoo, which will also be used for the Opel and Vauxhall Astra. The GM Daewoo model, which will be sold as both a Chevrolet and Holden, will have a different exterior shape and different specifications to its Opel and Vauxhall counterparts.
Mr Reilly also said the GM Daewoo team had global responsibility for the next-generation light-car platform that would be used for models across the same brands.
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