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GM Holden in the red again

Fanfare: Holden says the VE's start-up costs contribued to its 2006 loss.

VE launch, slow sales, exchange rates, VZ discounts and job cuts cost Holden $146.5m

Holden logo15 Jun 2007

By JAMES STANFORD

GM Holden has posted a $146.56 million loss for the 2006 calendar year. It is the second consecutive red-ink result for the Australian car-maker, which lost $144.6 million in 2005.

Holden said the 2006 result was affected by the launch costs associated with the VE Commodore and the WM Statesman and Caprice, while a substantial amount of the 2005 loss was attributed to development costs for the VE Commodore launched last August.

It added that because the new Commodore and Statesman/Caprice were introduced late in the year, there was limited time to recoup investment.

Holden listed a range of other factors that contributed to the loss in what the company deemed a "challenging environment".

The factors included exchange rates that favoured imports and disadvantaged exports, which fell from record 2005 levels to 46,074 in 2006, and higher fuel prices that led to reduced domestic sales and market share.

Company insiders also claim the prolonged VZ Commodore run-out and the associated discounting also affected its bottom line.

Holden spent $20 million in termination benefits after cutting back the third-shift workforce at its Elizabeth plant.

It also invested $307 million in research and development, and absorbed $69.7 million in revaluation costs.

Total revenue was down 7.8 per cent to $6.149 billion in 2006, when Holden’s 146,511 domestic sales was 16.2 per cent down on 2005 - although the Commodore managed to maintain its spot as the best-selling car in Australia. The 2005 and 2006 losses come after several strong years at Holden. The company profits of $256.5 million in 2002, $285.6 million in 2003 and $300.8 million in 2004.

On the bright side, engine exports rose 6.8 per cent to 212,266, taking total export revenue to $1.852 billion.

Holden released the media notification of the 2006 result just before 6.00pm Friday, in a traditional tactic designed to minimise TV and newspaper coverage of bad news.

Ford Australia did similar when it announced a $40.3 million loss for the 2006 calendar year in May - its largest since 1993.

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