Why did Holden fail in Australia?

Holden's demise in Australia after 72 years is the result of a complex interplay of causes, many of which were beyond the company's control.

There are deeper issues than the brand's missteps in trying to modernise its image by rebranding its imported Commodore as the Commodore after local production ceased in October 2017 or by running a series of misguided advertisements.

Holden blamed the 'perfect storm' of unfavourable economic conditions for its 2013 decision to cease vehicle production in Australia.

Local vehicle production became unfeasible due to the high Australian dollar, high production costs, a small domestic market, and increasing global competition, as well as the decision by the coalition government to end financial assistance.

It was the same for Ford and Toyota, and now that Holden has shut down this past Friday, there is no longer any local assembly.

However, the company was also responsible for its demise; in driving terms, the company could be said to have lost focus on the road long before the economic tsunami hit.

Holden's demise can be traced back in large part to the company's inability to adapt to the shifting dynamics of the Australian automobile market, specifically the surge in demand for SUVs and small cars as fuel prices rose and consumer preferences shifted.

Why it didn't work: It's been two years since Holden's factory in Australia shut down. "Both our personnel and our finances are solid. From a human perspective, this makes my departure less difficult. Everything is ready to go: the team, the products, and what's to come."

A little over 14 years after those hopeful words were spoken by one of Holden's greatest leaders, Holden followed in the footsteps of Ford and Toyota and left the Australian car-building business.

It's a sad situation for all three of them, but Holden in particular. General Motors' relationship with us shifted after it was awarded the contract to produce Australia's car by the Australian government. Holden's local name, its ancestry, the 48-215, and the many cars that came after it made us feel proprietary even if we didn't own a Holden or if a US giant owned Holden.

Holden dominated the industry for many years by capitalising on the country's association with Australia and promoting its genuine patriotism. Despite the close ties between the two companies, Holden decided to stop producing the Commodore, a car designed and built in Australia. The federal government turned its back, the numbers didn't add up, the end came, and the tears fell as protection eroded, Asia rose, tastes shifted, more brands entered a small and already crowded market, the Global Financial Crisis bit, and then it bit some more.

In the early stages of his leadership at Holden, in 1999, he formulated a 10-year strategic plan. It was an extremely aspirational document that predicted production at an enormously expanded Elizabeth would reach 300,000. The factory would churn out all-wheel drive vehicles and a BMW 3 Series competitor based on a scaled-down version of the Zeta architecture, among other models.

Holden would be GM's "homeroom" for affordable rear-wheel-drive development, sending out Zeta technology and fully assembled vehicles to select markets like the Middle East and North America. There was also a focus on promoting "halo models" in the strategy. The fantastic Commodore SS V Redline of today is a direct offspring of that original concept.

Frenetic activity characterised the day at Hanenberger's Holden. A third shift was added, the Monaro was transformed into a Pontiac GTO with the help of GM product guru Bob Lutz, exports increased dramatically, and a new V6 engine plant was constructed at Port Melbourne. Holden made a profit of $285.6 million in 2003, and a whopping $300.8 million in 2004.

Hanenberger was flawed in the ways that all ambitious men are. His management team, which included legendary sales and marketing chief Ross McKenzie, droll engineering director Tony Hyde, and thoughtful planning boss Ian McCleave, was routinely overworked and underappreciated as a result of his habitual overreach, autocratic decisions, and excessive demands.

Going global with the Holden name was Hanenberger's wildest idea. The idea was dismissed by GM as unimportant. The mind-blowing bravado wasn't without reason. Hanenberger saw it as a way to ensure a steady flow of exports in the face of unforeseen setbacks, such as General Motors's decision to shutter Pontiac and halt G8 (Commodore V8) exports several years later.

Why Did Australia’s Holden Car Manufacturer Die?

Holden is no more, and in a few decades, so will be the drivers who can recall when every other driveway featured a locally manufactured vehicle.

Holden is a storied Australian brand, remembered fondly for everything from family road trips in a rusting Kingswood station waggon to teen adventures in a used Commodore.

Unfortunately for Holden, its decision to put all of its resources into developing large sedans following the Global Financial Crisis was too risky for the company's nostalgic fans to save it.

Holden continued to manufacture the Commodore, a large, comfortable sedan, even as the market shifted towards SUVs and dual-cab utes for family duties or micro Japanese city cars for urban trips.

The VF Commodore, the most recent Australian version, was a stunning vehicle. It showcased the pinnacle of Australian engineering with a potent LS3 engine, bi-modal exhaust, and a top-tier cabin. True believers were the only ones who bought it because nothing else was available.

Mothers of school-aged children, who typically have financial sway in their households, favoured SUVs due to their increased ride height and the peace of mind it provided their families. Holden's sales used to be bolstered by the tradesmen who purchased its performance utes and waggons, but now those customers prefer the larger and more practical dual-cab models. For the past ten years, the Toyota HiLux, a pickup truck resembling a Toyota, has been the most popular new vehicle in the country.

Second is another dual-cab utility vehicle, the Ford Ranger. There is no full-size sedan among Australia's best-selling new cars.

Holden's future was sounded when General Motors decided the company couldn't afford to continue manufacturing vehicles in Australia.

In the years following the Great Recession of 2007–2008, the federal government did everything it could to keep the lion roaring.

Holden received $2.17 billion in Federal subsidies over the past 12 years, starting in 2000, in an effort to keep Australian auto workers employed. Unfortunately, that wasn't enough.

Holden's Elizabeth plant in Adelaide produced the final VF Commodore in Australia in 2017. GM sold its Opel and Vauxhall brands to the French automaker Peugeot-Citroen in 2017, marking the end of the company's decades-long presence in the European market. Holden brought in a rebadged Opel Insignia from Germany and renamed it the Commodore as a replacement, but it was met with widespread disapproval in Australia.

For Holden, 2019's new-vehicle sales total of 43,176 was the lowest annual total since 1954. Toyota sold over 47,000 HiLux pickup trucks in 2019, which is more than Holden sold of all their models combined.

At Holden's height of popularity in 1998, when the average Australian annual wage was just over $42,000, the country still managed to sell 94,682 new Commodores.

While many will take the opportunity to make snide remarks about Holden's demise (pointing out things like squeaky dashboards, the brand's popularity among "bogan" consumers, and its missed opportunity to capitalise on the SUV boom), the real decision maker is Holden's parent company, General Motors.

Even though it is a GM brand, Holden is not GM's top priority. Right-hand drive models are currently produced by GM for export to Thailand, Japan, Australia, and New Zealand.

Because of its lack of viability in these markets, the "Australian dream" of owning a suburban home complete with a lawn and a beat-up old Holden waggon in the driveway is being threatened.

Senior GM executives denied the speculation at the time that Holden would be included in the sale to Peugeot and Citroen.

When it came to right-hand-drive markets, Thailand, Australia, and New Zealand emerged as the company's top three priorities. But it has become too expensive to create vehicles that are specific to this area.

"Holden is not making money, and there's clearly not much chance of recovery," the author laments.

Holden Is Dead Because…

The demise of Holden should send a strong message to other automakers that aren't paying attention to what consumers want from their vehicles and can't seem to accurately predict future demand.

Holden has had some successes and failures in terms of design, but their most recent offerings, such as the Arcadia, Equinox, and even the newest Commodore, are too conservative. The company made cars that were bland and boring, so they sold poorly.

Holden, like many other car manufacturers, finally capitulated to the smartphone auto platforms Android Auto and Apple CarPlay. Perhaps the biggest mistake was not capitalising on parent company GM's investments in order to introduce forward-thinking vehicle platforms like the all-electric Bolt to the Australian market.

If it isn't already clear, the automotive industry is in the midst of a paradigm shift towards electric vehicles, and the businesses that are ready to embrace this change are seeing their market share increase at the expense of traditional car manufacturers who are holding on to the past.

The challenge for the auto industry as a whole is to make the switch to EVs without jeopardising profits from conventional vehicles. And while Holden may be the first household name to fail, it won't be the last.

If Holden had taken advantage of GM's research and development resources to develop innovative vehicles for the future, it would have carved out a respectable market in Australia and around the world. Holden's future success could have been paved with an attractive, high-performing vehicle at an affordable price, but that opportunity has been wasted.

If Holden failed, whose fault is it? Many people are quick to blame the government when in fact they are in the wrong. Consumers are not to blame either; they simply buy vehicles that satisfy their wants and needs.

For companies experiencing a decline in sales, the temptation to simply change the leadership may be strong. Contrary to popular belief, it was not. The company went through three different CEOs and managing directors in the course of a single year in 2014.

A new leader at a company like this will almost always be cautious, even though the organisation desperately needs an innovator. Because of these decisions, Holden and GM will lay off between 600 and 800 Australians by the end of 2020.

It's probably also worth reminding everyone that the Commodore was changed from a rear-wheel-drive Aussie-built model to a front-wheel-drive model made halfway around the world, a move that enraged the most devoted fans of the nameplate.

Chevrolet, Buick, GMC, and Cadillac are just some of the brands owned by GM that could suffer the same fate if the company does not learn its lesson.

You need to have the intestinal fortitude to make the tough choices if you want to still be around in ten years. Investment in research and development is essential for catching up and developing competitive electric vehicles in terms of design, range, performance, and price.

GM's interesting work can be seen in its various sub-brands, such as Cruise, which are dedicated to medium-density vehicles that operate autonomously and exclusively on electric power.

If you're uncertain about the future of the auto industry, take a look at this comparison of major players. Just so you know, that long, long history of ours doesn't mean a thing.

Holden attempted to shed light on the implications of today's announcement because, naturally, there are many questions in the wake of such a monumental announcement.

While we wait, I have high hopes that General Motors will one day convert the beautiful Holden FJ into an electric ute, much like BMW did with the Mini Cooper. If I'm dreaming, please tell me. So long, Holden.

Conclusion

After 72 years in the Australian market, Holden has closed its doors due to a variety of factors, many of which were outside of management's sphere of influence. The high Australian dollar, high production costs, a small domestic market, and increasing global competition were all factors in the company's decision to cease vehicle production in 2013. The company's failure to respond to the increasing demand for sport utility vehicles and small cars as gas prices rose and consumer tastes shifted contributed to the company's demise. Holden ruled the market for decades by promoting genuine patriotism and cashing in on Australia's reputation for quality. A BMW 3 Series rival based on a scaled-down version of the Zeta architecture was among the goals of Holden's 10-year strategic plan, which was first outlined in 1999. Production at an expanded Elizabeth was expected to reach 300,000.

Hanenberger saw the strategy as a way to ensure a steady flow of exports even if there were unforeseen setbacks, but GM dismissed it as unimportant. Profit for Holden was $285.6 million in 2003 and $300.8 million in 2004. Australians have fond memories of their childhood road trips in a rusty Kingswood station waggon or their teenage escapades in a used Commodore, both of which were manufactured by the legendary Holden brand. However, the company's decision to focus on developing large sedans in the wake of the Global Financial Crisis was too risky for its loyalists. The most recent Australian version of the VF Commodore was a beautiful vehicle, but the market has shifted away from it due to the popularity of SUVs and dual-cab utes for family duties.

As a result of General Motors' 2017 sale of the Opel and Vauxhall brands to Peugeot-Citroen, Holden imported the Opel Insignia from Germany and rebadged it as the Commodore, but the car was widely panned in Australia. When GM decided Holden couldn't afford to keep making cars in Australia, the death knell was sounded for the Australian automaker. Holden was discontinued because GM stopped putting a premium on right-hand-drive markets. Because of this, the "Australian dream" of having a suburban house with a lawn and an old beat-up Holden waggon in the driveway is in jeopardy. Although Holden's design history includes both triumphs and missteps, the company's most recent cars—including the Arcadia, Equinox, and even the newest Commodore—are all too safe.

They gave in as well to smartphone auto platforms like Apple CarPlay and Android Auto. Lastly, they didn't make the most of their parent company GM's resources to launch innovative vehicle platforms like the all-electric Bolt. The transition to EVs poses a risk to the auto industry's bottom line, so it must be managed carefully. If Holden fails, it will be the first major brand to do so, but it won't be the last. Holden could have carved out a respectable market in Australia and beyond if it had made use of GM's research and development resources to create innovative vehicles for the future.

A total of 600 to 800 Australians will be let go by the company by 2020 as a result of the turnover of three CEOs and managing directors in 2014. No one can blame customers, either, because they are just doing their best to fulfil their own wants and needs when purchasing a vehicle. If businesses want to still be operating in ten years, they must develop the intestinal fortitude to make unpopular decisions. Research and development funding is crucial for producing innovative and marketable electric vehicles like GM's Cruise. Holden made an effort to clarify today's news, and I'm keeping my fingers crossed that General Motors will electrify the FJ ute in the same way that BMW converted the Mini Cooper.

Content Summary

• Holden's demise in Australia after 72 years is the result of a complex interplay of causes, many of which were beyond the company's control.
• There are deeper issues than the brand's missteps in trying to modernise its image by rebranding its imported Commodore as the Commodore after local production ceased in October 2017 or by running a series of misguided advertisements.
• Holden blamed the 'perfect storm' of unfavourable economic conditions for its 2013 decision to cease vehicle production in Australia.
• It was the same for Ford and Toyota, and now that Holden has shut down this past Friday, there is no longer any local assembly.
• Holden's demise can be traced back in large part to the company's inability to adapt to the shifting dynamics of the Australian automobile market, specifically the surge in demand for SUVs and small cars as fuel prices rose and consumer preferences shifted.
• It's been two years since Holden's factory in Australia shut down. "
• Despite the close ties between the two companies, Holden decided to stop producing the Commodore, a car designed and built in Australia.
• Holden made a profit of $285.6 million in 2003, and a whopping $300.8 million in 2004.Hanenberger was flawed in the ways that all ambitious men are.
• Holden continued to manufacture the Commodore, a large, comfortable sedan, even as the market shifted towards SUVs and dual-cab utes for family duties or micro Japanese city cars for urban trips.
• The VF Commodore, the most recent Australian version, was a stunning vehicle.
• Holden's future was sounded when General Motors decided the company couldn't afford to continue manufacturing vehicles in Australia.
• Holden's Elizabeth plant in Adelaide produced the final VF Commodore in Australia in 2017.
• Even though it is a GM brand, Holden is not GM's top priority.
• Right-hand drive models are currently produced by GM for export to Thailand, Japan, Australia, and New Zealand.
• The demise of Holden should send a strong message to other automakers that aren't paying attention to what consumers want from their vehicles and can't seem to accurately predict future demand.
• If Holden had taken advantage of GM's research and development resources to develop innovative vehicles for the future, it would have carved out a respectable market in Australia and around the world.
• Holden's future success could have been paved with an attractive, high-performing vehicle at an affordable price, but that opportunity has been wasted.
• It's probably also worth reminding everyone that the Commodore was changed from a rear-wheel-drive Aussie-built model to a front-wheel-drive model made halfway around the world, a move that enraged the most devoted fans of the nameplate.
• If you're uncertain about the future of the auto industry, take a look at this comparison of major players.
• Holden attempted to shed light on the implications of today's announcement because, naturally, there are many questions in the wake of such a monumental announcement.
• While we wait, I have high hopes that General Motors will one day convert the beautiful Holden FJ into an electric ute, much like BMW did with the Mini Cooper.
• So long, Holden.

https://www.youtube.com/watch?v=cH8VoN6Y7nQ