HOLDEN SLUMP

Slow sales of Commodore and Equinox models leaves Holden with thousands of excess vehicles in stock Dave Buttner, Chairman and MD, GM Holden

Downturn prompts Holden to temporarily turn off taps

HOLDEN HAS made an extraordinary decision to stop production of many of its popular models, affecting factories as far flung as Germany, Thailand and Mexico.

The order to stop the boats delivering more new cars was made to address a worsening stockoversupply crisis due to slow sales.

Fresh from its worst-ever sales result – just 3927 cars in July – and months of market share below five percent, recently appointed Holden boss Dave Buttner has negotiated to halt production and deliveries of core models to clear existing stock.

Holden has thousands of cars gathering dust in paddocks and holding yards, a result of excess orders placed before anyone predicted the dire position the brand would be in once it ceased local manufacturing late in 2017.

“The sales were going like that,” Buttner says, motioning to the ground. “…and the tap hadn’t been turned off, so the production is still coming towards us – and that horrified me as an old [product] planner.”

“We’re trying to get back to a reasonable stock-carry level by the end of the year, so we can go into the new year in a healthy position.”

Buttner’s request to turn off much of the supply had the support of General Motors executives in Detroit, who hired the former Toyota Australia chief to try to turn Holden’s fortunes around in what has been its most challenging period.

With some Commodore models, Holden has requested the Opel factory in Germany (a factory now owned by the parent company of Peugeot and Citroen) not to build cars until 2019.

Similarly, the Equinox has been put on hold to address its poor sales position; in the first nine months of 2018, Holden’s sales of the medium SUV tally just 3621 units. That’s about as many as topselling competitors sell in six weeks.

Buttner says stopping the boats – in turn putting pressure on factories to deal with lower production levels – is about being realistic and accepting Holden has an uphill battle to build sales.

“If you don’t recognise the state of your sales and own up to it quickly, you’ve got a pretty huge pipeline coming towards you.

“We’ve looked at the whole portfolio, looked at what our standard stock should be … it was just a normal sales stock rundown … it’s not rocket science.”

But Buttner is adamant the slowdown in orders is a one-off about positioning the brand for challenges ahead.

“You have to be able to turn production down, but the idea is that you don’t have to do that often,” he says. “This is a fairly unique situation where we allowed the stock to keep coming towards us. Being an old manufacturing guy I’m fully cognizant of the burden that puts on a manufacturing plant.

“We’ve had good cooperation from the plants but it wouldn’t be something I’d like to repeat on a regular basis because from a credibility point of view you don’t build it by doing that.”

It’s understood Holden has recently been clearing some cars produced in 2017, which is far from ideal in the last quarter of the following year.