General Motors Confirms Holden Will Cease Australian, New Zealand Production By 201747
After months of reported investments, reassurances, negotiations, and general indication that it would not pull manufacturing out of Australia, GM has just confirmed that it will, in fact, discontinue manufacturing operations in Australia by 2017 — well before its initial promise of staying until at least 2022, and, in turn, letting everyone down.
The primary reason for the move revolves around the fact that manufacturing costs in Australia have risen 65 percent compared to just a decade ago, as the Australian dollar strengthened from just $0.50 USD to as high as $1.10 USD. In laymen’s terms, things are just too expensive to make a business case. Yet it’s going to cost GM A$400 million to A$600 million in the fourth quarter of 2013 alone to begin the wind-down process, with the automaker stating that it will incur “approximately $300 million to $500 million AUD for non-cash asset impairment charges including property, plant and equipment and approximately $100 million AUD for cash payment of exit-related costs including certain employee severance related costs.”
GM expects even more charges on top of the aforementioned costs through 2017, which makes us wonder how/when this move will end up paying for itself. There’s also the factor of customer blowback, considering that ending manufacturing in the country doesn’t seem like the most efective way to attract customers to Holden dealerships to buy cars.
GM indicates that 2,900 Australian jobs will be compromised as a result of this decision. We’re no strangers to what happens when manufacturing leaves a city or region, and plants close for good. Cities like Pontiac, Flint, and even Detroit, Michigan all come to mind. Hopefully the cities in New South Wales and Victoria can avoid a similar fate.
GM notes that the sale and service of Holden vehicles will be unaffected by this announcement, and warranties and spare parts availability will remain unchanged. GM will supposedly continue to sell Holden vehicles in the region beyond 2017 — meaning that they will have to be imported from somewhere such as Asia (South Korea or China), South America, or even North America. And the global design studio will also remain open.
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Well many of us saw this coming as far back as 2 years ago with some of the moves being made.
I hate to see this happen to the region but I also do not like to see GM lose money either.
I wonder how like till they announce the new RWD car being moved to Michigan to be built along side the Camaro? The positive is the new car will be built on the Alpha so it will be very updated in 2 years and it will help the region here in Michigan.
I feel for the families there but it is nothing we have not gone through here and with the right moves production could come back but hopefully they will not screw up things like the government here and leave this a mess for decades.
I expect the first clue of the SS and Commodore will come from NASCAR. The press will ask what will happen to the car there and GM will have some Easter egg for us to watch.
It is sad but and will be tough on people but if you note the number of people getting cut this will give you an idea of the size of this market. Note the Commodore was number 4 last year and only sold just over 30K units. It is hard to make money in this climate with high wages and high currency rates.
The news is no surprise and makes sense with the news last week that chevy pulling Korean product from Europe and Australia signing a free trade agreement with Korea.
After seeing the new chevy SS, it is disappointing. There is a small mention that gm will continue design in Australia, but it hardly sounded like real commitment. I suspect if mark was the new CEO, as a former Holden guy and the man behind the new SS, this wouldn’t have happened. With that said, it makes more sense for GM to invest in larger and growing markets, like china and the new talk, Indonesia.
Let’s face it, this and the Europe Chevy decision are financially sound and good for shareholders. I sure hope that the Opel and Buick joint program can work. The US Buick sales hardly justify the brand in the US and Opel has been a black hole.
With Ford already deciding to leave, and possibly Toyota as well, Australia may very well have to look into devaluing their dollar, among other things, in order to compete. This is not an easy decision for any government to make, but perhaps if they follow the Japanese model it may work a little better, seeing that the Australian economy is pretty buoyant at the moment. But then again, maybe devaluation may not have to be a government policy. Investor confidence in Australia may start to wane and the dollar may devalue all on its own.
Ford already announced they were pulling out. And Toyota does not sound like it will stay there so there will nobody left building vehicles.
The government is backing off on subsidizing the losing auto manufacturing industry. Holden was getting over $2000 per car built in subsidies. Imports were killing the Australian built vehicles.
This is an incredibly sad day. Holden represented Australia’s industrial maturity more than any other single product. To many the Holden brand is Australian owned, rather than GM’s subsidiary.
While the country was saddened by Ford’s announcement, I fear that Holden’s news will trigger resentment because of its heritage. The component industry will collapse, forcing out Toyota as well. Then the Aussie $ will also collapse, imports will get expensive and everyone will wonder whether local production could be viable again.
What Holden and GM NEED to do now is give Holden enthusiasts some good news. The planning of the next Commodore has to be well underway, more than likely with design concentrated in Australia and based on the Alpha platform. So announce these plans of a RWD car developed for Australia by Australians. Let it be known that Aussie sprit will live on in a RWD car and that Holden’s heritage is far from dead.
You have an opposition party that will delight in blaming the current government, particularly when Toyota makes a similar announcement, so get some good news out there that Holden still understands the Aussie auto scene and is planning accordingly.
I wonder if the Holden brand can keep its credibility as an Australian brand if all its cars are imported from elsewhere.
If Toyota shuts down and they keep some design and the relationship with HSV, may be things will be pretty good. The real issue can they build the right cars and trucks at a fair price? Moving production to Korea should keep them priced right with the free trade agreement. From what I’ve read, they haven’t had the right product in recent years and Toyota has.
As a gm shareholder, I believe they are better served spending money on production and marketing in emerging markets like china and Indonesia. There also is plenty of opportunity in south and Central America. Australia and Europe are not markets they ever will get big profits and I would be happy to see break even.
Do u think if a car designed and built in Europe would pass as an American car? I think not.
Where a car is built doesn’t really matter. It is where it is designed and where the company headquarters are. . . (aka where your most of your money is sent)
Buick regal was designed and built in Europe and sold in the US. I would bet 99% of Americans think it is an American car.
Everyone is getting hung up on the Opel input/Holden input/GM China input or GM NA input. You have to stop this kind of thinking as GM has.
This is a global company now and while they may send parts of each car to a different place around the world to do a part of the car they all are working together on much of this.
Case in point while many want to declare the Zeta as Aussie as a cold can of Fosters the truth is the program has a lot done down under but the staff was not Aussie. Also the head of the program Mark Ruess is from Michigan. Add to that the drivetrain was designed and built in America. Also many of the electronics are from Asia.
The fact is that this was a true 100% Australian car is just a fable. Yes Aussies contributed but so did many others and the car like most other GM products reflect a global effort.
I see most Australians as taking the import status of Holden’s in stride as the Cruze is #4 and climbing in sales and the two leading models were from Asian MFG. Their nationalization is not much different than it is in America. They are not like Europe and Japan were they favor the home brands just a little more.
I have many customers down under who are just in love with Chevy and spend tons of money importing and converting them to be legal to drive. I expect a Holden built in MI would be accepted well as long as the price is reasonable. With the dollar value going that way it should be fine. Also the Alpha will be a much better car with all the new investment and refinement already gone into the platform. I think the new Camaro will catch many off guard with the changes and improvements. It will be seen as like the C7 where there are no compromises in the cars like in the past. This would also be shared in a Sedan.
The people of Australia are getting what they deserve! They thumb there nose at American made cars and act like they can tell the parent company the one who owns holden what needs to take place and what they want when GM is the one putting up the money along with Australia government!
How does that national pride feel now? Waking up today realizing that almost ever car being sold in your country will be coming from some where else!
Remember you don’t own GM! GM owns you! Get on board or get pushed aside!
I hate to see anyone lose their job, but you can only give GM the finger for so long before GM pulls the plug!
Stop being such a A hole as you make the rest of us Americans look bad.
First off if you had any clue Aussies do not hate American cars as if you would like to note many of their car shows and racing events feature American cars. My company makes a lot of money off of supplying performance parts not just for Holden’s but the many Fords, Pontiacs and Chevys in Australia.
In fact they are one of the greatest lovers of American models in the world. The only real issue is they cost so much for them to import them and convert them. They are still pissed they did not get the Camaro.
Most Australian are something you do not understand Open Minded. They have a good appreciation for many cars but even like our own culture today people are just not as in love with their cars as they once were. The youth are more into their phones than a car.
Note they still import NASCAR stock cars and even copied Charlotte speedway yet they love F1, Indy car and their own touring car series that is one of the best in the world.
Before you start bashing a group of people at least know who they are and what they like.
It’s very sad, but GM needed to do this eventually. Unless Australia can reduce the value of their dollar (Which I doubt will happen). I don’t like seeing innocent people lose their jobs. .
This would be like GM saying all Chevrolet’s will be built in Japan. I would be very sad and probably wouldn’t buy a Chevrolet either. .
I understand where all the anger is coming from! You are losing a legacy important to Australia. . .
Scott in nearly all Holden product announcements, there is a reference to the Aussie engineering or modifications done to suit local conditions. So what harm is there in stressing Aussie content in the next Commodore being developed now. Such input may be minimal but it is harmless to boost the local contributions.
Remember there is no other country on this globe where the rivalry between the GM brand and Ford is stronger. That sentiment needs stroking now more than ever.
In short, it won’t. GM might as well pull out of Australia altogether. No locally built Holden = no Holden sales!
GM has made a monumental stuff-up here, just like Ford have. Neither of them will survive much longer after they stop local manufacture.
Why is this the case? So unless it’s built locally Australia’s won’t buy the car! Please explain why you have no problem taking our/GM money but you won’t take our cars!
Sounds a bit one sided don’t you think?
So which cars are you going to buy if all manufacturing of cars leave?
Then you just might be forced to buy one of these cars you say you will now despise!
I’d buy a chevy SS that’s made in Australia, why won’t you buy a holden that’s made in the states!
“Please explain why you have no problem taking our/GM money”
Who or what, exactly, are you trying to speak for? Because I don’t think you speak for anyone.
Louis there is no harm in it at all but it is a little misleading. This is what GM does for all their cars. Take a Cruze for example. It has different shocks and struts along with springs for Europe and the US as well as the Cruze for Holden did the same.
Even Companies like Honda does this too. But the basic core of the car is the same and a global design and has input from all divisions.
My fear is you can fool most of the people but knowing what I know about the Aussies one I do not think you will fool them as easily as they know their own product well and two most hold no grudge if there is any American connection.
So if they do it I am ok with it I just hope it does not back fire.
Even you have to understand that they live in a place and culture where much is imported. They did have an auto market but many of their product have been imported for years. They really do not all think this way. Note the best selling car has been a imported Mazda 3 and even the imported Cruze was number 4.
To understand other places like this a MFG has to understand the people. Since GM has been here for years and has many on staff born and bread in Australia here and there they should have a good understanding. and I do not see this as an issue.
I asked a guy in Perth yesterday about the loss and he was not happy with the loss of the jobs and a risk of no RWD. But I asked if one was imported from the states how would he feel. He actually was excited as he is aware of the Alpha platform and really would love it if they brought over the coming Camaro.
He owns a 68 Camaro SS now with a LS engine in it from a Holden. He agreed with my idea as long as the cars were not too expensive and with the exchange it would help on the transportation cost that would be added.
Aaron The only car Holden built down under was the RWD car. It was decreasing in numbers every year and the Cruze and other imported Holden cars have been increasing.
I think you will see that this will not have a long term negative affect.
If GM imports a Alpha car from here it could easily replace those sales. A Camaro would be a very popular move on the 6th gen and a sedan on the same platform would easily match the 30K sales they have on the Commodore.
Really look at their portfolio now, the sales they have and where all the cars are built and you can understand how small this market it. 107K plus cars is all they had to sell to be number 2.
The bigger worry is Toyota almost doubled that number with mostly imported and some domestic built cars. To catch them has been a challenge even with all domestic product.
Now the challenge for Toyota is to continue to build locally and be able to sell the cars at a competitive price with the imports and to still make a profit or they will visit the same path as GM and Ford. None wanted to leave and we may find Toyota may have to take the same path in time. In their case the suppliers may not be able to just support them alone anymore at a reasonable price.
The”global market”, means that major corporations don’t worry about politics. The companies have thrown caution to the wind, in their perpetual hunt for getting the most, while costing the least. This in itself, produced dependence on the final manufacturing country.
If Australia is forced to close it’s manufacturing down, across the board… Where will they turn to for a continued need for supplies… China or the west?
Better check out the geography, and ability, for supplying… cheap products. Their politicians will be more conducive to pressure from the supplier. China will be more than willing to sell the hangman’s rope to Australia.