THE LONG GOODBYE
With its carmaking days almost over, Holden is on a drive to reinvent itself
And then there were none. Next Friday the curtain comes down on Australia’s car industry, with the final act a Holden Commodore rolling off the assembly line at its plant in Adelaide.
It follows the exit of Toyota earlier this month and the departure of Ford last year. Of course, the date was set ages ago and the debate about the industry’s future was over well before that. It ended in December 2013 when Holden decided to quit. Ford had already announced its intention to leave and the critical mass required by the industry — in terms of local suppliers and logistics — needs at least two players to be viable. Toyota would have stayed. Holden cast the deciding vote.
Perhaps it’s only fitting that it ends with Holden since that’s where it began: in 1948, with Australia’s Own Car, the 48-215, or FX. To most Aussies it’s as dinky-di as the famous ad suggests: “Football, meat pies, kangaroos and Holden cars”. Even now, it’s not unusual to find someone who’s surprised that it is owned by General Motors.
Despite that, or perhaps because of it, exactly what was made here was often a subject of watercooler confusion. Does Holden make these? In many cases, it did. The Commodore came in numerous varieties, from Ute to Caprice. In the past, there were Monaros and Toranas and Camiras and Geminis and Vectras. If you’re old enough, early memories may include road trips in a Holden HQ or EK. Holden has made 7.6 million cars all told — more than Ford’s 6 million and double Toyota’s total. No wonder it has left an impression on the national psyche.
For a couple of decades from the mid-1950s it was utterly dominant. A Holden was the choice of almost every second buyer and one in three vehicles on the road wore the Lion badge. Production peaked at 166,274 in 1963 when the EH became the fastest selling Australian car of all time, with 250,000 snapped up in 18 months.
By the end of the decade, Hol- den employed 26,000 at 10 locations, with another 20,000 at 600 dealerships across the country. In 1968, a Monaro GTS gave Holden its first Bathurst win, repeated a year later. Holden’s self-assurance was revealed by the extraordinary Hurricane concept, a futuristic supercar-style two-seater that still looks modern today.
As with Ford and Toyota, Holden’s last day as a carmaker will take place behind closed doors out of respect for the 945 employees who will walk out of the factory for the last time. Chairman and managing director Mark Bernhard says quitting local production is the most profound change at the company since that first car and of course it will be difficult.
“There’s no question closure is going to be gut-wrenching,” he says. “We’re going to lose some terrifically skilled and passionate people who put their hearts, minds and souls into Holden.” Looking after them is priority one, he says. “We’ve worked through transition centres and 84 per cent of employees who have left Holden have successfully transitioned to new roles, retirement or study.”
As to the broader question of whether the loss of complex manufacturing is a tragedy for the nation or just another chapter in the globalisation story, he’s agnostic. “That’s for someone other than me to answer,” Bernhard says. “As a nation we’re moving forward. My job is to talk about us as a business, and we can see a bright future beyond manufacturing.”
Certainly Holden has gone through transformations before, starting life in 1856 as a saddlery before morphing into a coachmaker, then a car-body builder in the early 1900s. Its preference for using chassis from General Motors brands, such as Buick and Chevrolet, huge output and wellknown brand brought it to the attention of the US giant, which merged it with its Australian operation. In 1931, General Motors-Holden’s Ltd was born.
Aside from employees, Bernhard admits brand loyalists will feel the wrench. “For some customers who are hugely passionate about the product that we’ve designed and developed and manufactured locally it’s going to be a very sad day on October 20,” he says. For some customers, but not all. Insiders believe most potential new car buyers — as many as nine out of 10 — are already aware that soon every new Holden arrives on a boat. And there’s a change in sentiment: most no longer care where their new wheels are made.
It’s showing up in the numbers. Local cars have been overshadowed by imports for decades as a combination of steep tariff reductions, “user-chooser” lease arrangements and foreign exchange movements eroded their price advantage. During the past decade Holden has relied more on locally built vehicles than Ford or Toyota, but even its showrooms reflect the change. Of the 1.2 million cars it has delivered since 2008, locals only just shade imports 51 per cent to 49 per cent.
Two other factors have been critical: changing buyer preferences and market fragmentation. The days when every car was Holden or Ford were already behind us 25 years ago, but the large sedan was still the default family car.
But then along came the SUV. By the late 90s, the SUV was moving in on large cars’ territory and they began an inexorable slide, from 30 per cent of the market to just 3 per cent of it now.
“The key thing is the way the market has shifted,” Bernhard says. “If you go back 15-20 years ago the Commodore was the No 1 selling vehicle in the country at 100,000 units. Now the top selling vehicle is about 40,000 units.”
So making one model, or even two or three, is no longer enough to keep a factory busy. Imports are going to be a large part of the picture no matter what Holden does.
To many observers, though, Holden missed a chance to change tack. It stuck to large cars and big engines when blind Freddy could see their days were over.
If the large car decline looked obvious to some, it’s easy to see why Holden might have been overconfident. After swapping top spot repeatedly with Ford’s Falcon during the 90s, the VT Commodore that arrived in 1997 was about to revive the brand’s glory days. Sales took off. One year later VT busted previous Commodore records with 94,642 buyers and sustained demand above 80,000 for the next five years.
It embarked on a 15-year run as Australia’s favourite car. Before long a buoyant Holden revived the Monaro and, it seemed, couldn’t miss a trick. Exports were booming again as Commodores were shipped to the Middle East, and it got a surprise boost after coming to the attention of Detroit.
One executive in particular championed Holden’s expertise at engineering large, rear-wheel drive cars and pushed through a program to sell the Monaro stateside. Rebadged, it would resurrect the Pontiac GTO, a revered nameplate among US enthusiasts.
In 2004, output from Adelaide reached 165,252 cars — the highest total since 1963 — and the following year it set an export record of 60,158. Revenue hit $6.8 billion and profit $301 million. Let the good times roll!
Behind the scenes, Holden was doubling down on its large car commitment and working on something special. Unlike previous cars, which had started life as US or European designs, the next generation VE Commodore was a local project from the ground up. Underneath the sharp lines was a platform that aimed to become the basis for rear-drive cars throughout GM. It was a pitch for full integration within the giant’s product development operation on Australia’s own terms.
The VE was the right car at the wrong time. It flew in the face of rising concerns about fuel consumption and the movement away from large sedans. It could not arrest the slide. Sold in the US as the Pontiac G8, it had one good year before the global financial crisis hit and all GM’s myriad problems came home to roost. GM axed plans for rear-drive cars — the Chevrolet Camaro was the sole exception — and killed the Pontiac brand, taking Holden’s hopes with it. With VE — now the upgraded VF — gone, one of the first new cars to arrive will be the next Commodore. The nameplate is retained because “it has been synonymous with Holden”.
However, the ZB Commodore that reaches showrooms next February can hardly be more different. Like the original, it hails from Germany and Opel, where it’s badged Insignia. But it’s narrower than VF and there’s no sedan; it comes as hatchback or wagon. It breaks with Commodore’s rear-drive tradition, offering front or all-wheel drive. Topspec versions get a V6 while base cars employ a four-cylinder, the first in a Commodore since the mid-80s. And for the first time in a half-century there’s no V8.
The nameplate may resonate, but even Holden does not expect it to be the defining statement of the brand it once was. Spokesman Sean Poppitt says Holden needs to be “revamped for a more modern and multicultural Australia, but without losing our roots”.
“Retaining an authentic identity — because we were born here, we continue to operate here — is critical to who we are,” Poppitt says. “But it needs to be version 2.0, no doubt about that.”
Nurturing those roots means Holden will race the new body shape in Supercars, which also move to V6s in 2019, and retain sponsorship links with the NRL and AFL club Collingwood.
Nor has the runaway success of Ford’s imported Mustang escaped its notice. Beyond the promise of “V8 sports cars in the future” it refuses to comment. But it has quietly enlisted tuning outfit HSV to convert the US Chevrolet Camaro, a coupe powered by a 6.2litre V8, to right-hand drive. With a price north of $80,000, the first examples will become available early next year. The next generation will be made in right-hand and left-hand drive versions, obviating the problem.
Even better from an enthusiast point of view, the next generation Chevrolet Corvette due at the end of the decade also will be a global design, giving Holden a proper supercar to sell.
Controversially, Corvette and Camaro will retain their Chevrolet badging — and Holden bristles at any suggestion its brand may have been dropped altogether.
“GM sees a strong and bright future for us in this marketplace,” says Bernhard. “It’s as simple as that.” He also denies GM was tempted to sell its Aussie outpost, despite retreating this year from problematic markets including Russia, Indonesia and most notably Europe, via the sale of Opel to Peugeot Citroen (PSA).
Opel remains critical to Holden’s plans. As well as supplying the next Commodore, the Astra hatchback comes from its factory in Poland. Bernhard says the Opel sale agreement involves watertight guarantees to supply those models for the next five to six years, with Opel also a crucial supplier to GM mainstay Buick.
Other small cars, such as the Astra sedan (formerly Cruze), Barina and Spark, come from GM’s South Korean operation, while the Colorado pick-up and Trailblazer SUV hail from GM Thailand. The first of a new wave of SUVs will be the Equinox, a mid-sizer due next month, followed by the larger Acadia next year. Both are built in North America. It means the core of Holden’s offering will come from GM but it can be strategic about what it ships in and that can include other GM brands such as Chevrolet or even, down the track, Cadillac.
“We expect to have a significantly more diversified portfolio rather than relying on one product,” says Bernhard. “We’re trying to appeal much more broadly to the Australian public.”
Putting a whiff of Australia into this potpourri will be the job of some of the 350 designers, engineers and technical staff who are being retained. They will tune for local conditions, with what Holden hopes will be telling changes to key components such as suspension and steering.
“We’re very proud we built the industry here and we believe we do know Australians best,” Bernhard says. “We’re taking the best products from GM around the world and basically Australianising that product.” The main focus of the team will be projects across the GM world, with Australia’s reputation for design and development expertise ensuring that side of the business continues.
The other 650 corporate staff retained will have the task of arresting Holden’s plummet down the sales charts. It’s 15 years since it was our favourite brand and its share of the market has been slashed by two-thirds. Its retail network is shrinking in response, with another 20 dealerships to close, leaving 200. This year, sales have dropped a further 12 per cent.
Bernhard says it forces a rethink. “It does change the way we look at the business internally. It’s more of an opportunity to really focus on the customer, the way we look after them.”
Perhaps that’s already paying off. The latest sales satisfaction survey from research outfit JD Power puts Holden third, ahead of Ford, Toyota and even Mazda. The latest Roy Morgan intention to buy research also shows Holden on the up. Reinforcing this, Holden will introduce a sevenyear warranty to reassure buyers the brand is here for the long haul.
But can it be a contender again, or are its best days behind it? Bernhard is confident. “Absolutely we’re a force. As we look forward we expect to be a significant presence.”
‘We’re taking the best products from GM around the world and Australianising that’ MARK BERNHARD CHAIRMAN AND MANAGING DIRECTOR, GM HOLDEN