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More Cruze and less Commodore equals less profit

No small hit: The Holden Cruze trails the Commodore by just 6387 sales to the end of October this year, despite being offered in sedan-only guise until this month.

Holden says it would need to manage costs better if Commodore is outsold by Cruze

14 Nov 2011

A LEADING Holden official says the company would need to manage its costs better if the Commodore is out-sold by the Cruze small car.

That is now a very real proposition, with Cruze trailing the Commodore by just 6387 sales to the end of October this year, despite being offered in just one (sedan) variant.

Commodore sales are down 8.9 per cent to the end of October, while large cars have dropped 25.1 per cent during the same period, according to VFACTS.

Last week, Holden launched a locally-produced hatch version of the Cruze and expects it to boost sales, although it will not say by how much.

Holden executive director of sales and marketing John Elsworth told GoAuto the company would prefer the Commodore to remain the best-selling car in its range, but is prepared for it to be knocked off by Cruze.

“I think, emotionally, we love having the Commodore as the number one selling car, but to be perfectly honest with you we are not fussy what we sell people,” he said.

“If the market keeps moving and demanding small cars, that is just the way our company has to move and change with the market.”“It’s not me or Holden that determines it. People will vote with their wallets.”

Mr Elsworth conceded Holden makes less profit making Cruze models than Commodores.

“Yes, in terms the transaction prices, small cars are cheaper than large cars,” he said.

“It is a more profitable outcome for us to be making Commodores. It just means we have to manage our costs better.”

Mr Elsworth said Holden was well positioned to manage the changing market given it produces both small and large cars at its Elizabeth plant in South Australia.

“We have Cruze and it is a pretty strong position to be in to have the number one and number five top-selling cars as of October, with both cars coming out of the one plant,” he said.

“We can move our production around to keep meeting the needs of the reshaping market.”

Asked why Australians appear to have fallen out of love with locally made large cars, Mr Elsworth said: “It’s just the changing face of the market – the market continues to reshape itself and small cars and SUVs continue to be popular, along with light commercials.”

However, Mr Elsworth did suggest a lack of LPG-fuelled vehicles from both Ford and Holden contributed to the decline.

“One of the key drivers is LPG we haven’t had a dual-fuel LPG (Commodore) for months, Ford were out of the LPG game for quite a while and (for them) it was pretty much one in three (LPG to petrol), or something like that.

“That changes the dynamics of the market.”

Holden will introduce a single-fuel LPG system for Commodore for the first time early next year.

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