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Local cars slug Holden $670 each

Cost of living: Holden’s $40 million production shortfall equates to about $670 for every locally made Commodore and Cruze sold.

Holden’s $40 million factory loss takes its toll in the new-car showroom

Holden logo20 Jun 2013

By BARRY PARK

HOLDEN is losing about $670 on each car that rolls off its Adelaide-based production line, according to figures revealed overnight.

Australian Manufacturing Workers Union (AMWU) South Australian secretary John Camillo told ABC Radio this morning that Holden had revealed to its workers that its Elizabeth assembly plant was losing $40 million a year.

He said this is largely due to a pricing restructure earlier this year that saw thousands of dollars stripped from the price of the Cruze small car to better compete with imported models.

The new VF Commodore has also brought massive price reductions in order to stimulate sales of the struggling large-car range.

“The (Holden) workers were told yesterday that Holden would be losing $40 million dollars a year, and that’s because they reduced the cost of the Cruze and the Commodore to compete on the international market,” he said.

“So it’s very, very tough times for Holden, but there is a future, and we need to make sure Holden has a future here.”

The $40 million figure shows that if the car-maker sells the locally made Commodore and Cruze in similar volumes to the 60,000 units it shifted last year, the company can expect to lose about $670 on each vehicle rolling out of its Elizabeth factory.

Mr Camillo said labour accounted for only 15 per cent of the cost of making cars locally.

Holden external communications director Craig Cheetham told GoAuto the $40 million loss was not solely due to repricing the Holden and Cruze ranges to compete with cheaper imports.

“Obviously a lot of it has to do with labour costs and the costs of running the plant generally, so it’s every cost that ($40 million figure) accounts for,” he said.

Mr Cheetham said it was still too early to say what form the cost savings being negotiated with the union representing its 1700 manufacturing workers would take, or to make a call over how long the company would continue to make cars here.

“There has been some speculation in the media that Holden’s future in Australia will be decided in the next couple of months – I say that’s very strong to say that because it is going to take longer than that to decide what we’re going to do long-term,” he said.

“The difficulty is that what we’re looking for really is a straightforward answer, because not knowing what the government policy will be from September this year when the general election takes place, it makes it very difficult for GM to make any decisions about its own investment in Holden.

“Until we have a clear and definitive position, it’s very difficult for us to make any decisions at all, and I don’t think there will be any forthcoming before that (September 14 election) date at least.”

Mr Cheetham said what happened after the next election cycle due in about 2017 – and also after the Commodore is expected to switch to a front-wheel-drive global platform – would be more telling for the car-maker’s Australian future.

“In four years’ time, if everything goes according to the current plan then we’ll be halfway through the next-generation products anyway,” he said.

“We’ll already be committed to 2022 at least, so perhaps not the next election, but the one after that will be the cut-off point.”

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