News - Holden

Holden: China spells opportunity, not doom

China-bound: The Holden-built Buick Royaum and (below) Holden's Familly II engine, which has been exported to markets including China since 1985.

Holden sees opportunities - not problems - for Aussie exports and suppliers to China

Holden logo1 Jun 2006

GM HOLDEN chairman and managing director Denny Mooney has scotched doomsayers in the motor industry who are predicting that Australian manufacturing will be engulfed by exports from China, arguing the fears of massive China exports were "a little overplayed".

Mr Mooney said that far from being overwhelmed by China exports, there were opportunities for Australian suppliers to participate in China’s massive domestic auto market growth.

He also said General Motors was predicting that the domestic market in China would grow by 587 per cent between 2001 and 2020 to 15.8 million units a yearand that Australian suppliers could participate in that growth.

In response to questions from GoAuto about Australia’s competitiveness in China, Mr Mooney said that he believed China could become a significant market for engines built in Melbourne.

"I see China being (a market) for our (Holden) engines," he said.

Mr Mooney said Holden could competitively export engines made in Melbourne into China – with or without a free-trade agreement.

 center image"We export our four-cylinder engine to China right now and that engine is very competitive. GM builds four-cylinder engines in China. We know what it costs us to build engines in China and I can tell you we (Holden) can be competitive today.

"The same thing with the V6."Mr Mooney said that if there was demand for V6 engines for GM in China the demand would be filled from Australia.

"The thing about the V6 engine is that we have put that plant here and investedin the capacity here."He said Holden was an integral part of GM Asia-Pacific and that GM "would not put in additional capacity somewhere else".

"The capital investment is pretty high to do that, even in China. You still have to buy the same machining equipment you put in here if you put it in China. That equipment is pretty standard.

"The expensive part of building an engine is basically the capital equipment. We have relatively affordable energy and natural resources (in Australia) and we think we have an opportunity to keep that plant full by leveraging these export opportunities in the Asia-Pacific region.

"So we feel good about the growth in China and about what that means for our operation here."However, he said the story could be different if Holden ran out of spare capacity.

"If I have to put in new capacity, then I would not necessarily do that here. I would put new capacity right there," he said.

Mr Mooney said the V6 engine was already available in China in the Statesman (Buick Royaum).

"They sell the Buick LaCrosse, which is smaller than our vehicle (Statesman) but it packages a V6.

"There is V6 demand. Sport utilities are starting to take off up there, too."He said most car-makers were struggling to keep up with growth in China and that a lot of suppliers were "trying to get a footprint in China because the supplier footprint is still one of the weak spots".

"Everyone is struggling to put enough capacity into China just to keep up with the market.

"We hear a lot about exporting out of China into other markets but the reality is that, with the growth there, it has been difficult to keep up.

"So I think the China play outside of China (massive exports) is a little overplayed.

"It is hard to predict long-term, but short-term I would say there are not wholesale plans to be exporting completed vehicles out of China. The challenge is trying to keep up (with domestic demand)," he said.

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