Holden quits: No sales backlash to come, says MD

HOLDEN chairman and managing director Mike Devereux believes the company will not suffer a sales backlash as a result of its decision to pull out from car-making in Australia by 2018.

Defending the brand in the wake of its announcement that it will wind down its manufacturing and engineering operations over the next three to four years, at a cost of almost 3000 company jobs, Mr Devereux said the executive team would aggressively market its locally built Commodore and Cruze, along with key imported models such as the recently released Trax city SUV.

He also said Holden was “defying the market” and that its sales performance over the past two months, which has seen a slight improvement in its position, proved that its locally built vehicles can “not just survive, but they can thrive”.

“Holden has actually been on a bit of a roll,” he said. “The last two months, the Australian automotive market was down year-over-year – and Holden’s sales were up.

“In this business, no matter where you are in the world, it’s about three things: product, product and product. Now I know in this country we have a unique place in terms of being a brand that’s really only sold in Australia and New Zealand, so our brand has a lot more of an emotional connection to the country.

“But our goal is this: we have been doing quite well year-over-year in the last two months, we intend to have a fantastic December, we intend to support our brand very strongly (and) to hit the price points that we need to hit.

“The basic challenge – and this is the tough part for all of us, and it’s the tough part for me standing here – is that no matter how great the cars are that we are assembling ... it is economically not feasible and sustainable for us to continue to build them in this country.

“That’s what I hope people listening to this understand and I hope they also understand that we remain committed to being a great part of the automotive culture in this country with the Holden brand, through our dealers, for many, many years to come.” Asked whether Holden would suffer a backlash like the one Mitsubishi was said to have suffered when it pulled out in 2008, Mr Devereux said Holden’s situation was “totally different”, arguing that it had a “world-class product” in the VF Commodore – as evidenced by positive media responses to the VF-based Chevrolet SS just launched in the US.

In Australia, the VF series has stopped the haemorrhaging of Commodore sales, which were down 35 per cent for the first six months of this year but are now 11 per cent in arrears at the end of November with sales of almost 6500 units combined over the past two months.

Holden is, however, staring at a full-year result of less than 29,000 Commodore sales – its lowest on record – while the locally built Holden Ute, which is set to become a collector’s item come 2018, has not had the same boost in sales in VF form and is currently down 26 per cent year-to-date.

Just over 5400 Commodore-based utes have been sold this year, which is another low-water mark.

The new VF series has had a positive impact on the long-wheelbase Caprice, although at 1000 units for the year thus far – down 24 per cent on 2012 – it remains a niche player.

As GoAuto has previously reported, a serious concern for Holden is the ongoing sales decline of the Adelaide-built Cruze small car – the lion brand’s all-important contender in the biggest market segment in Australia.

Cruze sales were again in negative territory in November (-12.7 per cent) to be down 15.8 per cent for the year, just shy of 23,000 units and a long way behind the market-leading Toyota Corolla (up 13 per cent YTD to almost 40,000 units) and the other two major players in the segment: the Mazda3 and Hyundai i30.

Indeed, beyond all the talk of government funding cutbacks and limited export opportunities, Holden’s inability to compete on an even keel with the top-sellers in this key segment once it secured local manufacture of the Cruze is likely to have figured heavily in the collapse of the business case to build the next-generation model here – and the decision to close down its entire manufacturing operations.

“Make no mistake, we have looked at every possible option to build our next-generation cars here in this country to replace our existing models,” Mr Devereux said.

“Right now, Holden builds cars that are popular all across this country. Anyone suggesting otherwise is simply ignoring the monthly sales figures.

“The fact is that we build and sell two of the top-five passenger cars in this country right here at this plant in Adelaide. We are the number-two overall brand in this country – something we continue to be proud of.

“But no matter which way we apply the numbers, our long-term business case to make and assemble cars in this country is simply not viable.” Corolla is Australia’s most popular car this year (39,794 sales YTD), followed by the Mazda3 (38,060), Toyota HiLux (36,457) and the i30 (28,035). Commodore (25,218) and Cruze (22,959) follow in fifth and sixth place respectively, with the Australian-built Toyota Camry (21,326) and Australian-developed, Thai-built Ford Ranger (20,111) close behind.

Ford, which announced in May that it was closing down its Australian factories in 2016, has experienced a three per cent sales decline so far this year, with its locally manufactured vehicles taking a 16.2 per cent hit.

The Falcon sedan is down 27.4 per cent YTD to a record low of 9386 units to the end of November – placing it 34th on the list of top-selling models – while the Territory SUV is down 4.5 per cent to 13,137 units, enough for 20th place only. Falcon ute sales are down 20 per cent to 4317 units.

Despite several new model launches and an extra 40 per cent spent on marketing and advertising this year, Holden sales overall are down 2.9 per cent to the end of November, against a new-vehicle market up 2.2 per cent.

However, the past three months have seen cracks appear in what is still a strong-performing market (beyond one million units in 11 months), with falls of 2.1, 3.1 and 1.4 per cent respectively.

Holden’s sales were down four per cent in September, but picked up 2.8 and 1.2 per cent in the following two months respectively – enough for Mr Devereux to consider these “market-defying” results.

His positive spin is understandable in the face of the announcement he has just made, but Holden’s continued sales recovery will now depend to a large extent on how Australians respond to the devastating news.