General Motors has just announced plans to retire the Holden brand in Australia and New Zealand by 2021, while also winding down sales, design and engineering operations in both countries. Instead, GM will focus its strategies for the market on the GM specialty vehicle business.
The Detroit-based automaker painted the move as being a “decisive action to transform its international operations, building on the comprehensive strategy it laid out in 2015 to strengthen its core business, drive significant cost efficiencies and take action in markets that cannot earn an adequate return for its shareholders.”
It’s worth noting that GM Authority recommended GM replace Holden with Chevrolet in Australia and New Zealand almost a decade ago.
“I’ve often said that we will do the right thing, even when it’s hard, and this is one of those times,” said GM Chairman and CEO Mary Barra. “We are restructuring our international operations, focusing on markets where we have the right strategies to drive robust returns, and prioritizing global investments that will drive growth in the future of mobility, especially in the areas of EVs and AVs.
“While these actions support our global strategy, we understand that they impact people who have contributed so much to our company. We will support our people, our customers and our partners, to ensure an orderly and respectful transition in the impacted markets.”
GM President Mark Reuss added that the company explored various options to continue Holden operations, but could not find options that would 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.”
“At the highest levels of our company we have the deepest respect for Holden’s heritage and contribution to our company and to the countries of Australia and New Zealand,” said Reuss.
“After considering many possible options – and putting aside our personal desires to accommodate the people and the market – we came to the conclusion that we could not prioritize further investment over all other considerations we have in a rapidly changing global industry.
“We do believe we have an opportunity to profitably grow the specialty vehicle business and plan to work with our partner to do that,” he concluded.
GM says that in Australia and New Zealand plus related export markets, customers can be assured that GM will honor all warranties and continue to provide servicing and spare parts. Local operations will also continue to handle all recall and any safety-related issues, working with the appropriate governmental agencies.
GM also announced plans to shutter its Rayong plant in Thailand, which would result in the automaker discontinuing new vehicle sales operations in Thailand.
As part of these actions, GM expects to incur net cash charges of approximately $300 million and total cash and non-cash charges of $1.1 billion. These charges will primarily be incurred in the first quarter and continuing through the fourth quarter of 2020. In addition, these charges will be considered special for EBIT-adjusted, EPS diluted-adjusted and adjusted automotive free cash flow purposes.