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Oracle of Delphi

Union spills Holden plan to build a smaller car in Australia

7 posts in this topic

By JOHN MELLOR 8 October 2008

LEAKS from union sources that Holden is planning to build a small car at the Elizabeth plant in Adelaide have sparked speculation as wide apart as a return of the Torana to the installation of the successor of the Astra/Viva to take on an Australian-made Ford Focus.

The latter, which would be based on the Chevrolet Cruze unveiled at the Paris motor show last week, has more legs because it has been revealed that the Holden design centre in Australia, along with design centres in the US, Europe and Korea, were co-operatively engineering the car.

News of the car came as GM Holden was negotiating an enterprise bargaining agreement with the AMWU. It appears that Holden outlined to the union the potential business case for building a smaller car than the Commodore in Adelaide.

Unable to contain their excitement, union leaders leaked the news to Adelaide media.

But GoAuto understands that building a smaller second car in Adelaide is a mere glimmer in the eye of some planners at this point and has many hurdles to clear before it is seriously presented to GM regional headquarters in Shanghai.

Nevertheless, Holden is uniquely placed to build a second car line because it still has the Vectra assembly line in place from the ill-fated venture to sell locally-made Vectras in the late 1990s. So Holden can physically make a second car.

With Commodore sales in Australia under pressure, it would make sense for Holden to spread the risk of its manufacturing operations into another market segment and offer Australians an alterative-sized car from its plant.

Such a move would help guarantee the future of Holden manufacturing in Australia if Commodore volume is further affected both locally and in export markets.

But what car?

The poster boy for the Holden tribe would be a compact VE Commodore – the Torana.

Such a car is known to be favored by GM product Tsar Bob Lutz as it would certainly appeal in the US market, where downsizing will remain a focus.

And with the Australian dollar returning more exporter-friendly levels, it could make a lot of sense in the US and in the Middle East.

The global V6 engine can be run at 2.8 litres, GM knows how to do cylinder deactivation and Alfa Romeo sells a turbocharged version of the engine that is made in Australia.

But there is a catch. For a start, if they tried to build a smaller car off the Zeta architecture, it may not be small enough.

In addition, the cost of making a compact Commodore would not be much less that making a full-sized Commodore. Yet, if the car was going to compete in a lower segment, it would have to sell for roughly $10,000 less than a Commodore.

That simply leaves too little money on the table to make it financially viable.

Holden would most likely steer clear of a Vectra-sized car given that the medium car market is such hard work.

The fact that Holden only ever sold a maximum of 9500 Vectras a year (both locally-made and imported) during the heyday of its local production of the car indicates a certain reluctance would set in around the boardroom table if that one was ever floated again.

More likely, Holden would favour the Delta platform on which the recently shown Chevrolet Cruze, the next Astra and the next Holden Viva are based.

Astra had a very good track record in Australia, with between 26,000 and 33,000 sales a year between 2001 and 2005.

With the local market swinging to smaller cars and Ford moving to make the Focus here, Holden would have a foot in that market and also have Ford’s measure.

There is also increased export potential for Holden in the region. New Zealand is obviously in the mix, but India (which has a tariff rate of around 110 per cent) and Japan (which effectively bars imported cars) are out.

But, unlike the Commodore, which is prevented by regulations from penetrating the Thai market, in spite of the free trade agreement with Australia, this smaller car could be exported to Thailand in significant numbers.

And, if GM can generate export credits from South Africa, it would, like Ford, be able to send Australian-made cars into South Africa duty-free.

By 2011, when all this would come about, South African import duty would be around 25 per cent. This would give an Australian-made Astra/Viva some headway in that market.

Link: http://www.goauto.com.au/mellor/mellor.nsf...A2574DC000FA10A

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Oh, how exciting.:yawn:
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Nevertheless, Holden is uniquely placed to build a second car line because it still has the Vectra assembly line in place from the ill-fated venture to sell locally-made Vectras in the late 1990s. So Holden can physically make a second car.

If that's the case, why didn't we get Zeta 3 years earlier? I thought one of the major hurdles with Zeta was capacity.

The poster boy for the Holden tribe would be a compact VE Commodore – the Torana.

Such a car is known to be favored by GM product Tsar Bob Lutz as it would certainly appeal in the US market, where downsizing will remain a focus.

And with the Australian dollar returning more exporter-friendly levels, it could make a lot of sense in the US and in the Middle East.

I think the future of Pontiac hinges on this statement here.

The problem is; how removed from power is Bob Lutz? Since GMNA is still faltering and Lutz championed Zeta in light of current conditions, has his influence been lost?

The global V6 engine can be run at 2.8 litres, GM knows how to do cylinder deactivation and Alfa Romeo sells a turbocharged version of the engine that is made in Australia.

I've never heard of an Alfa turbo-ed version. If there is one, then why isn't it used here? More specifically, in Zeta?

That simply leaves too little money on the table to make it financially viable.

10K less? See my post in the Pontiac forum for how I feel about that.

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Holden would most likely steer clear of a Vectra-sized car given that the medium car market is such hard work.
That is the absolute WRONG attitude to have This is the corporate defeat mantra that seems to pervade GM and the other Detroit companies now. It's learned helplessness at it's best.

The fact that Holden only ever sold a maximum of 9500 Vectras a year (both locally-made and imported) during the heyday of its local production of the car indicates a certain reluctance would set in around the boardroom table if that one was ever floated again.

1) Why?!? That was a different (outdated piece of junk) car and a different time... Yet GM thinks that's a valid reason to not even TRY to do something like that in the future?!?!

2) Is this why GME hates Holden? Because Holden couldn't peddle its crap?

More likely, Holden would favour the Delta platform on which the recently shown Chevrolet Cruze, the next Astra and the next Holden Viva are based.
*IF* Holden decides to do Delta RIGHT, then THIS should be your Pontiac version of Delta and THIS could be another way to save Pontiac if GM executes the product correctly

Astra had a very good track record in Australia, with between 26,000 and 33,000 sales a year between 2001 and 2005.

Yet GME hates Holden?

There is also increased export potential for Holden in the region. New Zealand is obviously in the mix, but India (which has a tariff rate of around 110 per cent) and Japan (which effectively bars imported cars) are out.
Then Japan and India should be subjected to the SAME restrictions in other countries.

But, unlike the Commodore, which is prevented by regulations from penetrating the Thai market, in spite of the free trade agreement with Australia, this smaller car could be exported to Thailand in significant numbers.

Homogeny... But I guess it's a good thing if it helps Holden.

And, if GM can generate export credits from South Africa, it would, like Ford, be able to send Australian-made cars into South Africa duty-free.
Nice...

By 2011, when all this would come about, South African import duty would be around 25 per cent. This would give an Australian-made Astra/Viva some headway in that market.

Is it coincidence that Alpha is set to debut in the 2010-2011 timeframe? Could Holden still have a part in Alpha? (Despite what people say)

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Nice...

Is it coincidence that Alpha is set to debut in the 2010-2011 timeframe? Could Holden still have a part in Alpha? (Despite what people say)

Yes just a coincidence, think Delta II.

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