Life & Style | Motoring
Holden faces rough road ahead
Though carmaker Holden, General Motor's subsidiary in Australia, has survived the bankruptcy of its US parent thus far, it faces tough times in its export business especially with the Middle East, which is Holden's biggest foreign market.
- By Arno Maierbrugger, Staff Reporter
- Published: 22:53 July 5, 2009
- A worker stand on the production line at the Holden car factory in Elizabeth, South Australia. Holden, the Australian unit of General Motors, will slash production time at its only car factory in the country by 50 per cent to avoid cutting jobs as car sales slump.
- Image Credit: Bloomberg
Dubai: Though carmaker Holden, General Motor's subsidiary in Australia, has survived the bankruptcy of its US parent thus far, it faces tough times in its export business especially with the Middle East, which is Holden's biggest foreign market.
"Our export volumes have declined since the effects of the global economic crisis took hold in the third quarter of 2008, and we have worked very hard to match supply to reduced demand during this challenging period," Holden spokesman Jonathan Rose told Gulf News.
The Middle East accounted for about 75 per cent of Holden's exports in the last years. Since 1998, more than 200,000 Holden cars badged as Chevrolet and Pontiac have been exported to Middle East countries, making the region Holden's biggest and most enduring volume export market.
According to Richard Johns, a consultant with Australian Automotive Intelligence, Holden is now forced to rebuild its entire export strategy due the break-up of General Motors.
The Middle East used to be a thriving export market for Holden's big saloon cars, but the restructuring in the US would hamper a revival of exports to there, Johns said.
Currently, Holden cars are sold in the Middle East as Chevrolet Lumina (based on the Holden Commodore) and as Chevrolet Caprice (based on the Holden Statesman, which also uses the Commodore platform).
About 30,000 make their way from Australia to the Middle East each year out of a total Holden vehicle production of 108,000 per annum.
But in 2008, Holden also started to export Commodore-based passenger cars to the US where they were sold as Pontiac G8. Some 22,000 cars have been shipped to the US so far.
After GM's announcement to axe the Pontiac brand, those sales are expected to decline rapidly, affecting the entire business model for the Commodore-based export line.
Marc Reuss, Holden's chairman and managing director, said that the company now is forced to chase new export markets and concentrate more on Asia.
He was reluctant to explain what would happen to the export business to the Middle East if sales figures fall below a certain critical mass.
According to industry experts, Holden's advantage is its close association to GM's operations in Asia. The Australian carmaker is bolstered by its ties to GM-Daewoo in South Korea and Shanghai GM in China which are both well-performing as of now.
For Daewoo, Holden is producing a car called Daewoo Veritas, also based on the Commodore, and in China, a long-wheelbase model of the Statesman is sold under the Buick brand. Other export markets for Commodore-based models include Fiji, Brunei and Brazil.
Reuss said the company is planning to recoup export losses caused by GM's bankruptcy with new programmes. This includes exporting the new small Holden Cruze model possibly as LPG, ethanol or hybrid versions besides a gas-saving four cylinder engine core model.
"As for the Cruze, which went on sale in Australia last month, our dealers have witnessed strong consumer demand for the vehicle. We expect it to become a serious contender in the fast growing small car market," Holden spokesman Rose said.
Hopes remain that Holden's setback in exports to the US could make a soft landing. Industry insiders claim that Holden cars could be sold further under the Chevrolet badge when the Pontiac brand phases out in 2010.
But no decision has been made on that yet by GM's post-bankruptcy management. Holden reportedly is also working on a contract to export Commodore police cars to the US and to convince the authorities to replace their commonly used Ford Crown Victoria sedans which are due to phase out this year.
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