GM pulls the plug on Holden brand in right-hand-drive cull
Detroit - General Motors is set to discontinue its historic Australian brand Holden as it pulls the plug on right-hand-drive production. This will effectively see the company pull out of Australia, New Zealand and Thailand part of a strategy to exit markets that don't produce adequate returns on investments.
Holden ended its local manufacturing operations in South Australia in 2017 after 69 years, but the brand was still selling importing rebadged cars from abroad.
"The Holden brand will be retired from sales in Australia and New Zealand and local design and engineering operations will wind down by 2021," General Motors said in a statement.
GM President Mark Reuss, who once ran the Australian operations, said the company explored options to continue Holden, “but none could overcome the challenges of the investments needed for the highly fragmented right-hand-drive market, the economics to support growing the brand, and delivering an appropriate return on investment,” he said in the statement.
The company had "taken the difficult decision" based on "global priorities," Julian Blissett, GM's International Operations senior vice president, said in the statement.
"After comprehensive assessment, we regret that we could not prioritise the investment required for Holden to be successful for the long term in Australia and New Zealand, over all other considerations we have globally," Blissett said.
Holden’s market share, which was nearly 22% in 2002, fell to just over 4% last year.
It is not clear how many jobs will be lost, but GM said Holden employees will be provided with "separation packages and employment transition support."
Holden began in 1856 as a South Australian saddlery business and started manufacturing vehicle bodies in 1917. General Motors bought the company in 1931.
Since then the brand has produced some iconic Australian cars, such as the Monaro of 1968. Since the late 1970s it became known for producing the Commodore rear-wheel-drive sedan which was designed and engineered for Australian conditions. The Commodore was sold in South Africa as the Chevrolet Lumina in the early 2000s, and also made its way to the US as the Pontiac G8.
“This is a very disappointing outcome," said Karen Andrews, Australia's minister for Industry, Science and Technology. She said it was unfortunate both because about 500 workers would loose their jobs, but also because “they only advised the government of this decision just before the announcement.”
Dave Smith of the Australian Manufacturing Workers' Union also expressed chagrin.
Workers at Holden had thought they'd “been through the worst of it, and that's not the case,” Smith said. “For many of them their long-term workers have been very loyal to the company ... they've loved being part of the car industry, and now, it was such an iconic brand coming to an end; it'll mean an end to their jobs."
Thai factory sold to GWM
GM also plans to sell its Rayong factory in Thailand to China's Great Wall Motors and withdraw the Chevrolet brand from Thailand by the end of this year.
However, this decision may well end up being good news for workers as Great Wall Motors said it intends to expand in Southeast Asia using the plant in Thailand as its base.
GM said it had analysed the business case for future production at the Rayong plant, but low utilization of its capacity and low sales volumes “made continued GM production at the site unsustainable.”
Making the right investments
GM's CEO, Mary Barra, said the company wants to focus on markets where it can drive strong returns, scaling back operations in Australia, New Zealand and Thailand to selling niche specialty vehicles. GM will support its employees and customers in the transition, she said.
GM is making the same moves in Japan, Russia and Europe, where “we don't have significant scale," she said.
South Africa was also a victim of this strategy when the carmaker disinvested from the country in 2017, although thankfully its plant in Port Elizabeth was sold to Isuzu.
“We are pursuing a niche presence by selling profitable high-end imported vehicles supported by a lean GM structure,” International Operations Senior Vice President Julian Blissett said in the statement.
GM said it will honor all warranties in the markets, and it will continue to provide service and parts. Local operations also will handle recalls and any safety-related issues, the company said.
The Detroit automaker expects to take $1.1 billion (R16.3bn) worth of cash and noncash charges this year as it cuts operations in the three countries.
IOL, AP & DPA