General Motors has decided to dump the Holden brand in Australia, 72 years after the first home-grown Holden rolled off the production line.
General Motors said on Monday (today) it would wind down the local design and engineering operations in Melbourne by 2021. GM described the move as 'decisive action to transform its international operations, building on the 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 officials said about 600 employees would leave by June, while 200 would remain in ongoing roles connected with the company's pledge to offer at least 10 more years of customer service to owners of the 1.6 million Holdens in circulation.
Work at the carmaker's Port Melbourne site will be wound down by the end of June and the Lang Lang calibration facility will finish up in August.
The company will focus its strategies for the market on the GM specialty vehicle business. The company also announced that it had signed a binding term sheet with Great Wall Motors to purchase GM's Rayong vehicle manufacturing facility in Thailand; and would withdraw Chevrolet from the domestic market in Thailand by the end of 2020.
"I've often said that we will do the right thing, even when it's hard, and this is one of those times," said GM Chairman and CEO Mary Barra. "We are restructuring our international operations, focusing on markets where we have the right strategies to drive robust returns, and prioritizing global investments that will drive growth in the future of mobility, especially in the areas of EVs and AVs.
"While these actions support our global strategy, we understand that they impact people who have contributed so much to our company. We will support our people, our customers and our partners, to ensure an orderly and respectful transition in the impacted markets."
GM President Mark Reuss said the company explored a range of options to continue Holden operations, but none could overcome the challenges of the investments needed for the highly fragmented right-hand-drive market, the economics to support growing the brand, and delivering an appropriate return on investment.
"At the highest levels of our company we have the deepest respect for Holden's heritage and contribution to our company and to the countries of Australia and New Zealand," said Reuss.
"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 prioritize further investment over all other considerations we have in a rapidly changing global industry.
"We do believe we have an opportunity to profitably grow the specialty vehicle business and plan to work with our partner to do that," he concluded.
GM International Operations Senior Vice President Julian Blissett said that in Australia, New Zealand, Thailand and related export markets, customers can be assured that GM will honor all warranties and continue to provide servicing and spare parts. Local operations will also continue to handle all recall and any safety-related issues, working with the appropriate governmental agencies.
As a result of these actions in Australia, New Zealand and Thailand, the company expects to incur net cash charges of approximately $300 million.
According to the Financial Review, GM International Operations senior vice-president Julian Blissett said the decision had been made after the parent company in Detroit decided it could no longer justify the investment in right-hand drive vehicles.
GM informed Australian Holden dealers at meetings on Monday morning. There are almost 200 Holden car dealers in Australia, although the network has shrunk substantially since the group ended local car manufacturing in October, 2017 when the Holden plant at Elizabeth in Adelaide's north was shut down.
Holden sales have been in serious decline in Australia, in part because car buyers have shifted towards Sports Utility Vehicles and away from the traditional sedan which Holden built its business on with models such as the Kingswood and Commodore.
"Over recent years, as the industry underwent significant change globally and locally, we implemented a number of alternative strategies to try to sustain and improve the business, together with the local team,'' Blissett said.
The writing was on the wall for Holden, says the Financial Review, when it announced in December, 2019 that the famous Commodore model would be cut from its range in 2020, ending 41 years of history for what was once the biggest-selling car in Australia.
It replaced the vehicle in its line-up with a German-built Opel model with a Commodore badge, but sales have been sluggish.