Why General Motors axed Holden

There are three words that explain the closure of Holden in Australia and New Zealand: right, hand, drive.

Holden’s American parent, General Motors, is moving out of the right-hand-drive production internationally, and Australasia became its latest victim.

For the Australasian motoring media, the announcement of the closure isn’t a surprise as there have been murmurs of GM’s potential action since production of the Commodore ceased in Australia in October 2017.

In early 2018, an Australian motoring colleague – fresh back from the Detroit motor show and the city where GM is based – said to me “General Motors doesn’t give a sh*t about Australia [and New Zealand]. We’re just one per cent of the General Motor’s global sales”.

One per cent may be harsh, but one fact that is true is that the right-hand-drive market makes up only 25 per cent of global sales for all brands. For GM, that meant ditching production of these vehicles and focusing on the profitable left- hand-drive sales in China and the Americas.

When Commodore production stopped in Australia, the Aussies took their displeasure out on the brand and sales dropped unprecedentedly. GM Holden went from its usual spot of third or fourth in new vehicle sales to 11th at one stage.

In 2019, sales were down 26.6 per cent on 2018, which was down 33 per cent on 2017.

But for Holden New Zealand, it was business as usual. It kept its fourth place in new vehicle sales year-upon-year as Kiwis bought the Colorado ute, the American-based Acadia seven-seater SUV and Insigma rebadged as the Commodore.

The axing by GM of Holden NZ is unfair on a company that produced a brilliant campaign after the factory closure to keep customers and entice new ones.

Holden NZ management, under managing director Kristian Aquilina and general manager of marketing Marnie Samphier, produced the famous The Chop ad that showed a man ditch his “bogan” look and mullet for a clean shave and hair cut – before going to his new Holden, an Astra.

The team followed that up with humourous ads for the Trax compact SUV before producing the iconic Commodore ad that highlighted looking for the Modern Explorer.

That ad was so successful that when it was shown in Australia to the GM Holden dealer network, Samphier was greeted with applause, unheard of from the hardened car salespeople. GM Holden immediately swapped out our famous New Zealand explorers’ names used in the ad for their own local heroes.

By now Aquilina had been called back to the Australian head office in Port Melbourne and he brought Samphier with him.

But despite the pair’s tremendous effort, the brand was doomed.

GM Holden appointed former Toyota Australia boss Dave Buttner as managing director but he left the company after just 16 months in the role in early December 2019.

He was replaced in an interim capacity by the brand’s now head of commercial operations, Aquilina.

But Detroit still wasn’t happy, and a few days ago, made the decision to retire the brand from sales here and in Australia, affecting 800 staff.

While the original press statement says sales, local design and engineering operations will “wind down by 2021”, the latest news is that as early as June this year could see the closing of dealerships as Holden sells off all its stock.

It is expected that 200 staff will remain to implement warranty and repairs but it is still unknown where this will happen as dealerships would be closed down or under a new brand.

In the press statement, GM international operations senior vice president Julian Blissett said GM had taken the difficult decision after implementing and considering numerous options to maintain and turn around Holden operations.

“Through its proud 160-year history, Holden has not only made cars, it has been a powerful driver of the industrialization and advancement of Australia and New Zealand,” said Blissett in the statement.

 “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.”

GM undertook a detailed analysis of the investment required for Holden to be competitive beyond the current generation of products, said the statement. Factors impacting the business case for further investment included the highly fragmented right-hand-drive markets, the economics to support growing the brand, and delivering an appropriate return on investment.

 “After comprehensive assessment, we regret that we could not prioritize the investment required for Holden to be successful for the long term in Australia and New Zealand, over all other considerations we have globally,” said Blissett.

“This decision is based on global priorities and does not reflect the hard work, talent and professionalism of the Holden team.”

Aquilina said in the statement that given the significance of Holden through its history, it was critical the company worked with all stakeholders to deliver a dignified and respectful wind-down.

 “Holden will always have a special place in the development of our countries. As Australia and New Zealand grew, Holden was a part of the engine room fuelling that development,” said Aquilina.

“(The) announcement will be felt deeply by the many people who love Holdens, drive Holdens and feel connected to our company which has been with us for 160 years and is almost ubiquitous in our lives.

“Unfortunately, all the hard work and talent of the Holden family, the support of our parent company GM and the passion of our loyal supporters have not been enough to overcome our challenges.

“We understand the impact of this decision on our people, our customers, our dealers and our partners – and will work closely with all stakeholders to deliver a dignified and respectful transition.”

Holden said customers could be assured that the company will honour all warranties and servicing offers made at time of sale.