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The Priorities of General Motors: Ditching Holden

It seemed to be a case of grand misrepresentation. Holden cars, those great Australian acquisitions, along with home, lawnmower and nuclear family, gave the impression of indigenous pride, the home brand. It was also resoundingly masculine. But behind that image was a mighty American thrust, with General Motors holding the reins on investment as benevolent parent happy to rebadge the car brand when needed. Poor returns would invariably mean rough corporate decisions untouched by sentiment.

Between 2002 and 2005, things looked rosy. Sales of 170,000 a year saw the peak of the company’s returns. But Holden remained a distinctly parochial brand, incapable of moving beyond its Australian and New Zealand markets.

Breathing down the neck of GM’s Holden operations was the realisation that other auto companies were doing their own bit of wooing. The Australian buyer, over time, developed a taste for other products. Japanese car culture, with its clever alignments with game culture, seduced and won over buyers. Vehicles such as the Mazda MX-5 impressed. Toyota became a mainstay and South Korea’s Hyundai has proven more than competitive.

In 2017, GM ceased its manufacturing operations in Australia, a decision that was already promised by the company at the end of 2013. Then GM Chairman and CEO Dan Akerson put it down to those “negative influences the automotive industry faces in the country, including the sustained strength of the Australian dollar, high cost of production, small domestic market and arguably the most competitive and fragmented auto market in the world.” Australian Prime Minister Tony Abbott was less inspired before his fellow parliamentarians, and did not “want to pretend to the parliament that this is anything other than a dark day for Australian manufacturing.”

Australia had simply become too dear as a base, and the closure of the Elizabeth vehicle manufacturing plant in Adelaide saw the loss of 1,600 jobs. Melbourne’s share was 1,300. What took its place was, in the sexed-up language of GM, “a national sales company, a national parts distribution centre and a global design studio.”

The sweet promise of the transformation remained more aspiration than substance. The sale run in 2019 proved so poor that it saw the cessation of the Opel-based Holden Commodore and Astra in favour of SUVs. Such moves spelled doom for the entire Holden enterprise, and on Monday afternoon, February 17, auto-watchers witnessed an announcement by GM and Holden executives that Holden will close at the end of 2020. Some 600 workers will lose their jobs by June, leaving 200 to provide the relevant customer service for the 1.6 million Holdens that are still on the roads.

A glance at the promotional messages on the GM website should have worried any Holden fan. On February 16, the company stated in the cold language of the corporate boardroom that it was “taking decisive action to transform its international operations, building on its 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.”

GM President Mark Reuss was suitably cool in his statement. “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 prioritise further investment over all other considerations we have in a rapidly changing global industry.”

The federal government was notified a mere 15 minutes prior to the announcement, the sort of brusque treatment one has come to expect from the car manufacturer. The treatment is even more stinging given that the federal government has, historically, been one of the biggest single customers for Holden cars. Prime Minister Scott Morrison felt slighted, but despite noting the provision of some $2 billion for Holden over its existence, showed little surprise at behaviour he stopped short of describing as corporate vandalism. “I am angry, like I think many Australians would be. They just let the brand wither away on their watch. Now they are leaving it behind.”

Nowhere in the mournful tributes is the prowess of Holden cars, in all their ranges, mentioned. Family, sex and racing, yes, but nothing on the everyday competence of the products. Like relatives past their prime, they are celebrated as figures of mythology rather than the toilers of achievement. Former Holden worker Cara Bertoli summed up the sentiment of hope over corporate experience. “There were those rumours going around that yes, the brand name might eventually die off, but I guess it’s one of those things, when you’re loyal to the brand, you hope as much as you can that it doesn’t happen.”

Holden employees, on being interviewed, have shown consternation at GM. The alien parent, it was stated on ABC News Breakfast, had no idea about what a “home brand” might mean in terms of cars. Calls to the American offices were ignored; the parent seemed befuddled. Gary Mortimer, a professor of marketing and consumer behaviour at Queensland University of Technology, saw the Holden as lying at the “core” of a very Australian identity. “General Motors,” he rued, “took it away.” Australians may have fallen out of the love with Holden, but that was “because it fell out of love with us.”

Holden cars, repeatedly, tritely called “iconic”, have now lived up to that designation, a museum, or even church brand to be appreciated by collectors and the nostalgic. Any future manufacture, as the British car-dedicated program Top Gear discovered regarding the Jeep SRT Trackhawk, will be by American enthusiasts.

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16 comments

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  1. Phil Pryor

    Let us all comment and add a bit of sense and truth. In 1945-8, the world was stuffed economically and General Motors had a chance of making ally Australia a hub or base for extensions of sales and distribution. Eventually the world got back up, and Asia grew in sales, markets, workforce, manufacture, distributor, so that eventually poor USA concepts, designs, costs, duds, bullshit (the Holden being a Bathurst sports monster and a lovely family car for Mum) saw people learn to love other cars from anywhere. The two Holdens I owned years ago were in the low half of my stable of memories (not the worst, cheap to run) but were heavy old dogs in ride, braking, steering, parking. But the General made money, and that is what counts, while the Japanese in particular, are keen to produce value, quality at the market price, reliability above all others (I love my old Corolla) and so General Motors worldwide, today, may be on borrowed time. All those dreadful English cars have gone (I owned a few) and the future is changing very rapidly in technology, purpose, fundamentals. The General Motorsuarus will be remembered, but for what? (next…)

  2. DrakeN

    It pays to remember that GMC only survived the 2008 GFC due to massive intervention by the US government.
    I forget the actual amount, but I vaguely remember it being greater than the total Australian GDP.
    Please correct me if I’m wrong.

  3. Harry Lime

    DrakeN

    It was nearly as much as Smoko and his bandits stole from us buying the last election.His hypocrisy and absence of memory is remarkable.

  4. New England Cocky

    @DrakeN: The 2008 US government GFC intervention to “save” GM resulted in the first profit for GM since WWII. It appears that the managerial rorts were so enormous that the $600 MILLION “contribution” from Australia that year was also the profit reported by GM.

  5. Old bloke

    ‘But Holden remained a distinctly parochial brand, incapable of moving beyond its Australian and New Zealand markets.’

    I worked in China (Shanghai mainly) for near 8 years. In one job I was picked up from home and driven to work in a Buick. The Buick was built in the GM Shanghai factory. This was in the early 2000’s. The Buick was a Holden. It did have a leather interior and the 3.0 litre engine well before that engine appeared in the Australian Holden. So, actually, the car was not limited to Australia and New Zealand. Of course, this was a left-hand drive car.

  6. Sammy

    I dont know what scomo has to complain about. This is free market capitalism at its best apparently.

    Lets face it the Japanese and Koreans make better cars for less money followed closely by China. Anybody who thinks that governments and taxpayers should be propping up the likes of established and decades old car manufacturers is just dreaming. All that will do is prolong their demise. (In fact the same goes for the fossil fuel industry). The victims in this are the workers, not aussies who think holden is synonymous with cars. I wonder what all the bogans will drive now.

  7. Kathryn

    The stone cold neoliberal capitalists have finally gone and SHOT and KILLED the LION of Australian-built motor vehicles = the Holden!

    Thanks to Phony Grabbit, this country no longer has a car industry – so much for the LNP’s pathetic empty promise to protect business in Australia! Just about EVERY COUNTRY IN THE WORLD, including India, China, Korea and many other third world nations, have a viable car manufacturing industry. What these profit-obsessed, insular grubs in Canberra don’t realise is that just about EVERY motor industry right around the world – including the USA – provide government tariffs and support. Why? Because most countries have a great sense of “ownership” and pride in their home-brand vehicles and it keeps THOUSANDS of people in jobs – not only in the direct manufacturing area but in ALLIED areas (supplying parts etc).

    More than any other country I can think of, the Holden car was more than just a car in Australia. The Holden was part of our national “psyche” …. just about every Aussie has owned one at some time in their lives (especially Baby Boomers).

    The legendary Aussie tune: “Football, Meat Pies, Kangaroos and Imported Cars” just doesn’t have the same ring!

    General Motors is shutting down because the day Abbott decided to stab Holden in the back, many Australians moved across to Toyota, Subaru, Ford and other models because they were (justifiably) afraid that this day would be inevitable and that parts for Holden cars would then become harder to get and more expensive.

    SHAME ON YOU, LNP – your refusal to provide a few taxpayer dollars years ago in tariffs to protect our legendary Holden has now cost thousands of jobs – many of them now being absorbed overseas.

    So much intelligence and expertise lost to overseas markets but, are we surprised? The LNP are experts at scaring away experts, scientists, academics and anyone showing an iota of creativity, intelligence or imagination! The boring, mundane LNP/Murdoch/IPA Alliance wants to dumb Australia down because, let’s face it, only the most STUPID people in the country cheer them on!

  8. Andrew J Smith

    Once the Opel Commodore came out or was adopted in the mid late ’70s Holden’s days of local design, subsidies and manufacturing were numbered, even more so with robotics and automation while service industries became more significant employers.

    Time for a new edition of Huxley’s Brave New World including not just a Ford museum, but a GM/Sloan museum too….

  9. Kathryn

    Remember the time (many years ago) when the Australian government (at federal and State levels) had a policy that INSISTED on government cars being made in Australia? Then along came the elitist conservatives (like John Howard) who forego the Australian-made Holden, Magna or Ford in favour of the foreign-made prestigious Mercedes Benz or BMW to satisfy their delusion of self-importance! There are many reasons why the Australian car industry went belly-up, the lack of government support played a huge part.

    Sammy, don’t agree that Japan and Korea made better cars, the Australian-made cars were fantastic cars – I owned a few of them! What is different is that the governments in Japan, China and Korea provide HUGE subsidies and support to their car manufacturing industry whereas the penny-pinching LNP refused to support our car manufacturing industry. This may prove a FALSE ECONOMY when a large number of the employees in the car manufacturing (and allied) industries will end up on the dole.

  10. johno

    Never liked the Commodore and big cars in general. Had a Datsun 120Y for a while, cheap to run, tough and reliable, also easy to fix.

  11. Andy56

    I have a different take on the whole sorry saga. Let me state from the outset, i have a VE commodorre and just did a quick melb sydney trip. Returning 8.8l/100km at 110km/hr and aircon all the way and this is a 12 yr old car.
    The last of the comodorre line was a great car in anyones language, however…..
    GM failed us big time by not going deisel, by not seeing the trends and by not concentrating on quality and tech. Yes we were just an outpost making do, but our engineers did a fabulous job. GM failed us because they are strictly “in house” . Holden were unable to break the shackles and the fact that GM has made a decision from america proves the point.
    No RH deisels come out of america and the petrol engines reflect where america is at, still guzzling. We were tied to the whipping post.
    The australian government failed us, i will never forget Mr Hockey nor forgive.
    What the nay sayers dont take into acount is the engineering knowhow that has been lost. The jobs once gone, will never return. See Keating’s opening up of our evonomy and what happened to all the people who lost their jobs, my mother never worked again.
    Unless the government provides incentives for our potential, we will stay a banana republic because from where i stand, thats what we now are. see menzies and compare to the current LNP

  12. wam

    A sad accurate summation of the end of hands on australian manufacture in victoria and south australia. Soon to be followed by SA ship building. thanks pynut and billy
    Spot on, kathryn, pollies could have shown the way by supporting our industry but chose to show the opposite. The lying rodent is so horrified by, and frightened of, unions that he was blind to the damage his phobia caused then and the repercussions now felt under these twits so far up themselves to see any consequences.

    ps ’56
    I am barely enough to be your dad and we have a storm but if menzies didn’t have the european commo haters and the dlp his running jumping standing still’ would have ended 12 years before gough and Australia could be the fabulous country of which we dream.

  13. Jack Cade

    Joe Hockey – the original bloated oaf whose mantle was assumed by shagger Christensen, told GM to ‘go forth and multiply.
    Much as I loathe the Coalition – and loathe is not too strong a word – the rot set in long before. I remember when GM closed its Woodville/Cheltenham works in SA. One of the TV stations interviewed workers pouring out of the factory gates, asking what they thought had gone wrong.
    One worker said ‘Look at the bloody carpark, mate. WE are not even buying the bloody cars, and we make ‘em. The parks full of Jap cars!’

  14. DrakeN

    @ Katheryn: “Sammy, don’t agree that Japan and Korea made better cars, the Australian-made cars were fantastic cars –…”

    Well, I disagree vehemently with that opinion.

    I arrived in Australia in 1965 and trialed many makes and models until settling on a secondhand VW beetle which suited my needs at the time.
    The Holdens didn’t get a look in after testing an FC which, at speeds above 50 miles per hour/80Km per hour had axle loadings so light that they became unsteerable in sudden changes of direction.
    “Industrial dandruff” – the rust that developed after only a few months parked in the open, and even more rapidly if you left it near the seaside, has been well recorded.
    The FB and EK which followed had a similar problem and many of the EJ and EH were even worse, being delivered to the customer with existing corrosion hidden under poorly applied ‘Duco’.

    The VW was far from a perfect machine, but it was significantly less problematic than the many Holdens I was required to drive.
    On the Japanese side, early Toyota Crowns and Nissan Cedrics handled better even with a lot less horsepower, were far better finished, more comfortable and infinitely more reliable.
    The rest, as they say, is history: Fewer and fewer knowledgable motorists as well as the many who saw the advantages which their neighbours gained by moving away from the ‘Big Three’ buying into the “Australia’s superior quality” bullshit and outright tribalism of their marques acolytes.
    This despite the price disadvantage imposed by import duties.

  15. Andreas Bimba

    This was not inevitable. Australia’s severe case of neoliberal disease, a corrupt political class and rule by the finance and mining sectors imposed the removal of tariffs and free trade agreements upon Australia’s once substantial manufacturing industry.

    If a 15% tariff on imported cars was maintained instead of electorally unpopular subsidies, then there is a good chance we would still have three local car manufacturers and if we had a Labor federal government then plans would have been in place to transition to local manufacture of EV’s and also possibly hydrogen fuel cell vehicles.

    Our local new vehicle market of one million units per annum could have sustained a 500,000 unit p.a. local manufacturing industry plus exports worth a total of about A$15 billion p.a. turnover employing over 50,000. This could have been done relatively cheaply but now the economics will stack up against such an eventuality from ever becoming possible – thanks to Tony Abbott and Joe Hockey for rejecting Holden’s moderate request for and additional $80 million p.a. for ten years (total $160 million p.a.) in late 2013 to retool their factories and replace the Commodore and Cruze models.

    Indeed peanuts when you compare this sum with just the management fees charged by our superannuation funds of $40+ billion p.a. which is about 100 times the yearly subsidy received by the entire Australian car manufacturing industry back then.

    Australia really is a banana republic with a raw material extraction, private sector debt fuelled, real estate speculation, tourism, foreign student, retailing, gambling, price gouging and tax evasion based economy heading rapidly towards a cliff – just as Johnny the Rat and Peter Costello planned.

  16. DrakeN

    @ Andreas,

    The import duties on imported cars did nothelp the “Big Three” to maintain their pre-eminence when it can to buyer choice.
    Despite the built-in price advantage, poor quality control, high handed dealship behaviours, design faults, all impacted on their ability to live up to the promises of their advertising.
    Even deeply held distrust of and hatred towards the Japanese was not sufficient.
    What many people wanted was modest comfort, reliability, safety and durability rather than simply economy – but even that was made available in the smaller sized imports from Japan.
    Cars like the Datsun 1600 series offered all those requisites and brilliant performance and handling.
    Now it is the South Korean manufacturers who lead the pack across a broad range of types.

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