US loss to cost Holden $1bn a year

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US loss to cost Holden $1bn a year
Article from: The Sunday Mail (Qld)



Carly Crawford

April 26, 2009 12:00am

EMBATTLED carmaker Holden stands to lose up to $1 billion a year when its ailing United States parent dumps major brand Pontiac.

General Motors is this week expected to announce plans to ditch or sell the brand as it desperately works to stave off bankruptcy.

That means the maker of Australia's most popular car could be in for more pain.

Holden had been banking on exporting 30,000 VE Commodores each year to the US, where the model is sold as the high-performance Pontiac G8.

VE Commodore exports began last year in a deal worth about $1 billion a year.

Holden builds the left-hand drive VE Commodore – with help from a $6.7 million Federal Government loan – at its plant in Elizabeth, South Australia.

The company spent $77 million preparing the plant for the vehicle's production, hailing the project as the future of the Elizabeth plant.

The deal was expected to lift Holden exports to 70,000 a year – half its total production.

Although the car was well-received by US auto critics, the world economic crisis meant the G8, which retails for $A53,000 in North America, has failed to achieve strong sales.

Only about half the 25,000 G8s delivered to the US have been sold.

Holden, which has not made a profit since 2004, had hoped VE Commodore exports would reach up to 50,000 a year.

It is Holden's second blow this year over Pontiac's demise.

In January, Pontiac shelved plans to import a G8 ute from Australia as its performance sports truck.

Not looking good for Holden, bright side, more FORDS will be sold downunder !!!

[robjh80]

Holden have really screwed themselves up over the last few years!

Replacing a good deal of their model line up with cheap Korean built vehicles

Heavily investing in upgrading the Elizabeth plant to supply Commodores to the US as rebadged Pontiac's .... only to sell half of them and then see the Pontiac brand name be killed off

Holden will be sold off in the "GM Fire Sale" before too much longer just as Vauxhall in the UK currently is.

[Bossxr8]

Holden are absolutely stuffed.

[Romulus]

GM(H) are a basket case.

[FPV8U]

Originally Posted by Bossxr8

Holden are absolutely stuffed.

GM are absolutly stuffed.

[Bossxr8]

Originally Posted by FPV8U

GM are absolutly stuffed.

The whole GM empire is stuffed, SAAB and basically gone, doesn't look like anyone wants to buy them, Opel is getting sold off, Hummer is getting sold off, Pontiac is going, Holden are in big trouble and GM is on the point of bankruptcy.

[Sprint XR8]

If the Chinese bought Holden it would only be to strip the plants and ship them back to China. Same as what happened to the Mitsubishi plant.

[flappist]

If holden go out of business, the falcon as we know it is dead. There is no reason to spend zillions on development of a new V8 or other high powered engine for future emission standards if there is no direct competition.

If there was no HSV and no SS commodore and Ford only offered a RWD N/A 180+/-kw V6 then I suspect more than 90% of the current falcon buyers would be happy and together with picking up a significant percentage of previous holden buyers would make a viable business.

The remainder being holden bogans, Ford V8 and turbo enthusiests could be left out in the cold after the euro4/5 nazism takes over.

Not a good thing......

[OBS35N]

it is sad that the current climate will eventually reduce the number of brands that we can buy, it will be good to see car producers listening to new technologies and asking consumers what they want

[fou_bleu]

Originally Posted by flappist

The remainder being holden bogans, Ford V8 and turbo enthusiasts could be left out in the cold after the euro4/5 nazism takes over.

Not a good thing......

... and that's where engines like the EcoBoost V6 come in. Not to mention Ford's current BOSS replacement (nearing end of development) the 'Coyote' which HAS to meet all the fancy standards the world over. The base spec Coyote (5.0L) should make about ~300kW and 550Nm!!!. Oh yeah, strong sources are indicating that the engine has the abilities to be bored out to a max of 7.0L!!! 427 GTHO anyone?! (Oh no, not this again! lol)

[flappist]

Originally Posted by fordman6

... and that's where engines like the EcoBoost V6 come in. Not to mention Ford's current BOSS replacement (nearing end of development) the 'Coyote' which HAS to meet all the fancy standards the world over. The base spec Coyote (5.0L) should make about ~300kW and 550Nm!!!. Oh yeah, strong sources are indicating that the engine has the abilities to be bored out to a max of 7.0L!!! 427 GTHO anyone?! (Oh no, not this again! lol)

Enthusiasm always overtakes rationalism. There is a financial crisis, HSV and FPV are selling bugger all compared to 5 years ago.
Just because an engine complies with a standard somewhere else does not mean it complies here and even if it does it still must be engineered into the vehicle at enormous expense.

If Ford cannot make as much profit by building V8/T6 as they would building with one engine despite missing out on many sales they will go with the money EVERY TIME.

I believe the only reason the BOSS and T6 exist is because of the LS1. 10 years ago we were all happy with 185-220kw windsors VS 185-215kw holdens. The VT2 LS1 revolutionised sport saloons in Australia. Ford tried to complete with the T series but were always behind the 8 ball. When the T3 was launched, HSV had a C4B powered GTS that was almost a second quicker over the 400m.
Ford release BOSS & T6 then Holden released LS2 & LS3.
It is purely marketing based.

If FORD had not released BOSS etc holdens would be nowhere near as powerful as they are as cheaper, less powerful engines and therefore cheaper driveline components would have been used to reduce costs and increase profit. (and maybe this disaster would not have been so bad).

There is historical precedence for this, try and find a V8 XF or EA. VL nearly did not have a V8 option either.

But this is all conjecture, what happens, happens and there really is nothing we can do about it except BUY NEW FALCONS (not second hand, demos or model runouts).

[Powdered Toast Man]

I think the big point everbody seems to be missing is if Holden is sold off to an overseas company and it's Australian operations stripped and sent to somewhere like China or India you can also say goodbye to Ford Australia as well. If Holden's manufacturing is taken overseas the component industry here will more than likely eventually collapse taking the last 2 remaining manufacturing operations (Ford and Toyota) with it I suspect.

Apart from that I agree with Flappist, if there is no hipo Holden product to compete with why would Ford bother spending on the R&D to make their own hipo models. They will just make do with what they can get away with.

[Wally]

So a loss of $1bn on 70 000 vehicles.

Thats $14k a car. If they were targetting say 20% gross on each car @ $53k = $10.6k. So, according to the writer they are going to lose $24.6K in revenue per car..... I don't think so.... off to school Carly Crawford.

[Gobes32]

Originally Posted by Wally

So a loss of $1bn on 70 000 vehicles.

Thats $14k a car. If they were targetting say 20% gross on each car @ $53k = $10.6k. So, according to the writer they are going to lose $24.6K in revenue per car..... I don't think so.... off to school Carly Crawford.

Maybe she means revenue, not profit? Otherwise you are correct, the numbers don't add up.......

[Falc'man]

Originally Posted by Powdered Toast Man

I think the big point everbody seems to be missing is if Holden is sold off to an overseas company and it's Australian operations stripped and sent to somewhere like China or India you can also say goodbye to Ford Australia as well. If Holden's manufacturing is taken overseas the component industry here will more than likely eventually collapse taking the last 2 remaining manufacturing operations (Ford and Toyota) with it I suspect.

Apart from that I agree with Flappist, if there is no hipo Holden product to compete with why would Ford bother spending on the R&D to make their own hipo models. They will just make do with what they can get away with.

It's full steam ahead at Ford Au whether Holden survive or not ;)

[4Vman]

Originally Posted by Falc'man

It's full steam ahead at Ford Au whether Holden survive or not ;)

Its been a long held belief that there's only room for 2 car manufacturers in Australia, i can't see Ford falling over if holden do, there will still be a demand for XXXXX new vehicles every month here regardless how many retailers there are, the biggest issue for Ford would be ramping up production and keeping up with demand.

[Gobes32]

I agree, Holden and Ford no longer buy the amount of locally produced parts they used to because the quality is not of a world standard. Therefore, they do not rely on the same local suppliers that could threaten each others operations.

[Nikked]

Originally Posted by 4Vman

Its been a long held belief that there's only room for 2 car manufacturers in Australia, i can't see Ford falling over if holden do, there will still be a demand for XXXXX new vehicles every month here regardless how many retailers there are, the biggest issue for Ford would be ramping up production and keeping up with demand.

Not to mention if holden shuts up there will be many unemployed skilled workers. The Goverment (State or federal) would then almost have to do all it can to help the remaining 2 companies survive. It would be cheaper to help the companies rather then provide unemployment funds etc...

Ford is still selling cars, the falcon is still selling, it may not be in high numbers but Ford seem to be able to work with it. Alot of people complain about Fords decisions of late (Dropping fairlane, less v8 models, no Fg wagon) but these have been stratigic clippings to maintain a focused sellable line.


*Edit

Everyone should have a look at the Brazil Assembly plant, alot of componets the were out sourced to companies are manufactured on site. Cutting cost on transport etc...

There is more to it then a domino effect.

[greenfoam]

Ford allready gave up on performance cars once, they would never have brang the V8 back if Holden hadn't of stuck with one. Don't forget that . They also don't sell enough Falcons to keep the local parts suppliers going. Neither car would exist without each other

[Gobes32]

Originally Posted by greenfoam

Neither car would exist without each other

they do not rely on the same local suppliers that could threaten each others operations.

[4Vman]

Originally Posted by Gobes32

they do not rely on the same local suppliers that could threaten each others operations.

This is true... most suppliers are unique to one brand or the other, or have a heavy bias to 1 brand or another.. if holden fell over i doubt it would effect Fords supply that much at al, you can bet Fords purchasing dept has been busy ensuring they have dual supply options heading into the future.

[Falc'man]

Originally Posted by greenfoam

Ford allready gave up on performance cars once, they would never have brang the V8 back if Holden hadn't of stuck with one. Don't forget that . They also don't sell enough Falcons to keep the local parts suppliers going. Neither car would exist without each other

Hello. What makes you think the Falcon (and Territory) is the only car that will be manufactured in Australia by Ford? The Focus and all it's off-shoots will keep any local suppliers pumping night and day. Anyway, alot of Holden's suppliers for VE are overseas (China).

There's a plan at Ford Oz, a bloody good one, so there's no apparent fear over their future...

[Transfiguring R]

Falc'man, I keep running into your posts, and they're making me smile more and more!

Cheers for the hints.

[barbarian]

Holden's closure is no biggie for Ford, it would just mean entire market share gradually transferring over to Ford Aus a win - win situation for Ford

[Eu-GenixX]

i think you'd find most holden customers would probably switch to toyota

[barbarian]

That's brilliant, Ford and Toyota battling out in large sedan market. I highly doubt real RWD enthusiasts would make that drastic step

[Watto_Cobra]

Originally Posted by Eu-GenixX

i think you'd find most holden customers would probably switch to toyota

Maybe. Some jump back and forth between blue and red.

I suspect Holden die hards who want performance would go Scooby or Lancer. I can't think of anything in Toyotas range that interests me.

I know one thing, I couldn't bring myself to go near a large FWD so if Falcon/Tezza went it'd be Commodore V8 or Focus XR5T for me. Nah, I'd be keeping the last Falcon released.

[Wally]

Let's look at this logically. If Holden and Ford have been reduced to a niche market, there must be a certain amount of brand loyalty in the sales. Unfortunately discussion boards don't sell new cars, otherwise Ford Forums would account for Falcon being the market leader. Likewise LS1 forums would be creating a gazillion new jobs at Holden to keep up with demand.

The traditional Falcon market is the six axe handles across the back rural man, the traditional Commodore market the whoosey boy townies. There are exceptions to this with the orange Falcon the favourite ride for cabbies and the ocassional well to do who wants the cheap as chips chugalug V8 power found under the commodore bonnet and doesn't care if it's badged GM.

As far as brand loyalty, well if holden were Collingwood, ford would be Essendon. If either club folded there would be minimal spillage in membership to either camp. Some may even roll their membership into and NRL.!

[Gobes32]

Bear in mind that neither manufacturer wants to see the other one go. Competition means each manufacturer is pushed to develop a better product and in the end it is us customers who end up the winners.

[vztrt]

Originally Posted by Eu-GenixX

i think you'd find most holden customers would probably switch to toyota

The turbo is already bringing Holden people over to Ford. If the new V8 comes online and produces good power then they could get the V8 brigade over.
Fleets well they will change brands on what will be best for the company...also the profits are small compared to private buyers.