GM "underestimated" impact of Holden factory closures

In an admission that GM's top brass miscalculated the lay of the land Down Under, the man who made the decision to terminate Holden manufacturing operations in Australia has admitted the customer uncertainty that has followed is more serious than expected.

Stefan Jacoby, GM vice president of international relations, told an Australian media contingent, including motoring.com.au, in Detroit that "I was the one who decided to stop production in Australia."

He said "...the decision was based on a business case," but conceded the fallout from the announcement of the closures, due to take place at the end of 2017 and roughly a year after Ford shuts its car factories, has been worse than predicted.

"I have underestimated the uncertainty of our customers and we will identify that and correct that," he said.

Part of the 'correction' process will be aided by the introduction of a V8-powered rear-wheel drive coupe, potentially the Camaro or Corvette, to rival the Ford Mustang.

The introduction of a new rear-drive sports coupe is likely to have a positive effect on customer perception as well as restoring confidence in the brand, as will significant local input from Holden in the Commodore's replacement, a front-drive large car due in 2018.

When Holden announced it would shut down its manufacturing operations in Australia in December 2013, it came as no surprise. The pending decision became headline news across every TV channel, web site and newspaper, particularly as the (then-new) Abbott Liberal Government was pressuring GM into clarifying its position on local manufacturing.

A quick look at the Holden sales post-closure announcement shows that, compared to 2013, Holden's 2014 sales dipped from 112,059 sales to 106,092, representing a 5.3 per cent drop.

That compares unfavourably with the industry average drop of two per cent. Lump in the misconception in some quarters that the closure of local manufacturing equates to the death of the brand and you can see why Jacoby is jittery.

"We believe Holden is an iconic brand and we want to strengthen the Holden brand. What is important is to clarify our commitment to Holden," stated Jacoby, referring to better supporting GM's Australian arm with innovative right-hand drive vehicles, of which an increasing number which will come from Europe.

As we reported in October 2014, one third of Holden's entire range will soon be European-sourced and Jacoby reiterated this fact, noting that it will rely less on Asian imports.

"Opel and Vauxhall will be great donors for right-hand drive," he observed, but signalled that all Holden-badged products would have an Australian flavour.

His point was this: every car that GM imports in future to Australia will be tailored to the market – ride and handling will be one key area. And in this respect, Holden's Lang Lang proving ground and engineering team will be crucial.

One question that still needs answering is whether the next-generation Opel Insignia, widely tipped to be the Commodore's replacement, will bear the Commodore name. 

Watch this space…

- with staff