Economy of scale killed Holden in the end

Monday, 17 February 2020

It would be dishonest to say we never saw it coming, but in the end the economy of scale simply made it impossible for Holden to continue.

Today's global and massively competitive car market means that operating a brand in two comparatively tiny markets is something that even a giant like General Motors couldn't make add up.

Of course, it wasn't just that Holden was only sold in Australia and New Zealand, it was that they are right-hand drive markets and, for GM, there weren't any of them left to help balance the costs either, so while the focus is on General Motor's decision to axe Holden in Australia and New Zealand, the wider ramifications of the decision effectively end right-hand drive production of GM models entirely.

Having previously pulled out of other RHD markets like the United Kingdom, Japan, India and South Africa, the company's largest remaining RHD markets were Thailand, Australia and New Zealand.

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GM says it struggled valiantly to make a case for Holden to continue, but the numbers didn't stack up. Not helped by the fact that there were no other significant RHD markets left to help balance the books.

'This was not a decision we took lightly,' said GM's International Operations Senior Vice President Julian Blissett in a press conference after the announcement today.

Holden announced that it was dropping the iconic Commodore earlier in the year in an effort to keep the company alive.

'It was an agonising decision. But it was an issue of scale - it's just too difficult to sustain a brand only operating in two markets.' In Thailand the company operates as Chevrolet.

When asked whether GM had considered either selling Holden or rebranding it to another GM brand, such as Chevrolet, Blissett would only say that the company had looked at 'a whole raft of ideas and many other options' and none of them could be made to work. He declined to comment directly on what those options were.

However, even operating under the parent brand couldn't save GM's operations in Thailand, with parallel announcements being made that Chevrolet would cease operating in Thailand and, because Australia and New Zealand made up the majority of uptake from the company's Thailand manufacturing plant (where the Holden Colorado is sourced), it too would close.

Blissett said that the plant - which had been 'severely under-utilised' - had been sold to Chinese manufacturer Great Wall, which has big plans for its upcoming new ute in this part of the world.

The Holden Colorado, which is built in Thailand and is sold there as a Chevrolet, will end production. The facility that builds it has been sold to Great Wall.

However, neither Blissett nor Holden Australia's interim GM and chairman Kristian Aquilina would confirm that GM would retreat from Australia and New Zealand entirely, with Blissett confirming rumours that the company was seeking to continue its representation here via a 'GMSV' (General Motors Specialty Vehicles), similar to the current operation run in partnership with Walkinshaw Performance which offers LHD vehicles (the Chevrolet Camaro and Silverado pick up) 're-engineered' to RHD alongside its current HSV line up of modified Holden Colorado utes.

While Blissett refused to comment further, saying that the company had yet to talk to its 'partner firms' in the current operation, he did add that 'we do see a future for GM in this market and we intend to have a market presence here.'

Whether or not this would include the recently announced Corvette was also unclear at this stage. The Corvette was announced as being engineered for RHD production, but with the demise most other RHD production, this eventuality is very much up in the air, with neither Blissett nor Aquilina willing to comment on it.

Holden's interim GM, Kristian Aquilina, says the company tried everything to keep Holden viable.

While the company stated that 75 per cent of its 800 employees across Australia and New Zealand would 'be separated from the company', less clear was the fate of the 51 dealerships across New Zealand, with Blissett saying that they had told dealers just prior to the media announcement and the company had a 'transition plan' for each dealer involving compensation and the opportunity to remain as service and parts agents.

As far as customers go, Aquilina stated that 'we will stand by our cars' and that the company would supply aftersales, warranty support, service and parts for at least the next ten years. 'There are 1.6 million Holdens out there - we will honour all of them,' he said.

Aquilina, a former GM of Holden New Zealand, said that the company came up with an ambitious investment proposal to keep Holden alive.

'We chased down every conceivable strategy and looked under every rock. But the hard truth is that there was no way to come up with a plan that would keep Holden viable. Holden is 160 years in the making, and I am personally convinced that General Motors tried everything to keep Holden going. I know we tried everything.

'There is not much that matches the enjoyment that the Holden family gets seeing Holden fans out there enjoying their vehicles.

'This is a tough day for the Holden family. Some of the biggest Holden fans are the people I get to work with every day. I couldn't ask for a more amazing team.'

The company says that Holden Customer Care is available to answer customer inquiries and all warranties and service agreements. Holden customers in New Zealand can call 0800 465 336 or visit www.holden.co.nz.