Why did Holden shut down?

GM's local production in Australia came to a halt in 2016. After 2019's dismal sales, GM announced two months ago that it would discontinue the Holden Commodore and Astra, both of which were based on the Opel platform, in order to shift production to trucks and sport utility vehicles bearing the Holden brand. Australians must now deal with the reality that Holden will no longer be produced by General Motors.

For those doing business in New zealand And Australia on February 17, 2020, this date would go down in history.

One of Australia's most recognisable and long-standing automobile manufacturers announced their "retirement" in the wake of a petition of retail "collapses" as interruption hit the retail industry in 2018 and 2019.

Retirement? Let's pretend it realised it was dead. GM has announced the Holden brand will be discontinued in New Zealand and Australia.

Holden Will Be Canceled by GM

Holden's parent organization, General Motors, announced on Sunday that the Holden brand would be discontinued in 2021. This comes just 3 years after General Motors shut down Holden's final assembly plant, effectively turning the Australian automaker into an importer.

The company claims that financial considerations alone led to the decision to end production of the Holden line. From the announcement:

In order to remain competitive in the long-term in the Australian and New Zealand new car markets, GM has made this tough choice after a thorough analysis of said investment needed. Unfortunately, this analysis showed that this investment would not be profitable enough for GM's standards.

Production and distribution costs for right-hand-drive models would have been prohibitive if the Australian and New Zealand markets represented more than 1% of the total.

Holden maintains it will assist current customers by upholding all warranties and providing ongoing product support. Problems with recalls or safety will be addressed as well. In any case, you've got ten years of uninterrupted access to service centres and replacement parts.

Even though the Commodore will be replaced by the Chevy Camaro in the nation's Supercars series, General Motors still intends to sell speciality vehicles out of its lineup there.

It's a shame to see Holden go because it's such a well-known name in the industry. Though it only sold vehicles in New Zealand and Australia the company's exciting back-drive, V8-powered sedans, waggons, and utes were known all over the world.

Just How Did This Occur?

How can one among Australia's most recognisable brands make such a blunder?

They are so mistaken that they are willing to abandon a market that handles the sales of over a million new cars and the purchases of another two to three million used cars annually.

Despite the low total volume, the per-person rate makes it a very successful auto market.

There has always been a tangled web of factors that contribute to the demise of large corporations. Holden will be the subject of countless articles and analyses for years to come.

My focus as a consultant specialising in brand experiences is on data collection and analysis aimed at gaining deeper understanding of brands.

Now for the thesis.... Holden was unable to close the product gap.

GM may have a number of motives for wishing to remove their funds from Australia. All of these factors, however, can be boiled down to one simple principle: Holden was unable to bridge the gap between its brand promise and its actual performance.

Simply Put, What Is the Definition of a Brand Gap?

When there is a discrepancy between "who we are as a brand" (brand character - internal culture, behaviours, and systems), "who we say we are as a brand" (advertising and communications), "who our clients thought we are as a brand" (customer beliefs, reputation), and "who we need to become as a brand," a brand gap exists.

The truth about ourselves lies somewhere in the four directions represented by the vectors "who we are," "what we say we are," "what our clients thought we are," and "who we need to be."

The brand gap refers to this dissimilarity in the target audience's and the brand's values, attitudes, and objectives.

A quick tidbit of information for the relaxed brand manager reading this: To put it plainly, every single brand out there has a brand gap. I'm including you in that as well.

As this is Holden-centric, I'd like to resume the narrative.

The Holden From the ‘90S

Let's travel back in time to the roaring, exciting 1990s rather than to the 1850s when Holden, a saddlery, was founded.

Right around the time that Wilson Phillips was belting out "Hold On.....just one more time" in the '90s, the Holden car brand was gaining popularity.

Yes, I appreciate it when people get the ironic pun.

Holden's market share increased from 21% to 28% in the '90s. Holden is responsible for producing Australia's most popular car, which is exported in large numbers.

Holden's fortunes began to decline as the decade came to a close and the new millennium began. In fewer than five years, what had seemed like an unshakeable top spot in the auto industry began to slip away. Its market share had dropped from 25% in 2004 to 15% in 2006. Panic usually sets in when a brand's price starts to fall precipitously in the face of fierce price competition.

This is where everything went wrong. Big brand gaps began in the early 2000s, when Holden decided that reducing manufacturing costs was the best way to preserve its position as the market leader.

Why?

• Conventional V6/V8 passenger auto sales, which Holden dominated, were being hurt by rising cost of living burdens, especially the persistent headline of soaring petrol prices.

• Young people were a target market for the new smaller, cheaper cars. Market share for Asian automakers like Hyundai & Kia was growing, proving they were serious rivals.

• Market newcomers were quicker to market with new tech integrations that allowed younger consumers to connect iPods & emerging smartphones, capitalising on the growing trend of mobility.

If Sales Are Falling, Don’t Blame Consumers; Instead, Look To Improve the Product.

Unfortunately, it seemed like General Motors thought that cutting costs in production would reverse the company's falling sales.

Holden's product development had a well-established procedure in place by the turn of the millennium, and that procedure involved stealing Opel's cheaper models and using them to fuel the company's production machine. When General Motors (GM) increased its investment and now owns 70% of such South Korean label Daewoo, the focus shifted to Daewoo.

This allowed for a hasty, panicked marketing plan in relation to the rising popularity of small SUVs and cars and the decreasing popularity of V6 and V8 passenger cars.

During the years 2005-2010, Holden:

• Rebranded the Daewoo Kalos now as Holden Barina.
• Cancelled production of the Viva in favour of the Holden Astra.
• Discontinued the Frontera & Jackaroo models and replaced them with the new Captiva.
• Opted to switch to the Daewoo Epica rather than the Vectra.
• Was defeated by Isuzu and forced to reintroduce the Rodeo under the Colorado name.
• Unmodified the Daewoo Cruze and sold it as the Holden Cruze.

Within 5 years, Holden had thrown together a mishmash of brands pulled together through a concentrate on 'cheap' to compete, setting the stage for this last ten years of sales.

They've also replaced two classic Aussie names—Jackaroo and Rodeo—with a variety of European but also American ones. This abandonment of cultural ties undoubtedly enraged thousands upon thousands of Australian consumers.

Holden once explained that the company's success was due to its emphasis on providing excellent service and low prices.

When it comes to both variety and cost, Australia's new car market is among the most competitive on the planet. There are over 50 different brands, with over 350 different models, all vying for the roughly 1.1 million annual vehicle sales. Brands that fail to provide superior customer service and reasonably priced goods will struggle to succeed in today's market.

Under the guidance of massive national advertising campaigns, these models hit the streets and immediately exposed the vast chasm in consumers' perceptions of their respective brands.

Even within the Holden lineup, the product strategy resulted in inconsistent in-car experiences across various models. Customers were not given the same level of service they had come to expect from brands like Volkswagen, BMW, and Mazda. Your vehicle's interior and steering wheel configuration were likely determined by the region from which Holden 'grabbed' the product.

Customers, who have been enlightened to the importance of UX (User Experience) to a brand's success by the likes of Apple and Google, have begun to take notice of this UX failure, and social media has begun to erupt.

Holden was de-Australia-ing the national icon while Australians were busying themselves with identifying more and more with Anzac Day.

It became obvious that customers weren't purchasing genuine Holdens, but rather a low-quality import disguised as a Holden.

Probably your first thought is, "Well, what's the problem?" Isn't this what other Asian automakers like Hyundai and Kia did as well?

Is it not true that new car sales are boosted by cheap imports? And why shouldn't Holden? Don't they satisfy the market's needs? Well, sort of.

First off, the distribution network is losing money. Holden claimed that industry-wide dealer margins averaged 2% in their submission to the ACCC's 2016 "New Car Retailing Industry - a market study by the ACCC" report.

Let's assume that many Holden distributors in the network are in the red due to the brand's middling performance in the market.

Second, and more importantly, this review's focus, is what happens when product development and marketing take two completely different approaches to the same problem.

In this case, an unfulfilled brand promise about a product's qualities. As a result, a chasm opens up and keeps growing wider.

Australia-based office marketers needed to get the word out about the Holden name. They were obviously successful in selling it because they made a lot of money.

The problem is that the brand promise and the product experience are at odds with one another.

Even though the SUV and 4WD Ute markets were expanding rapidly by this time, the Holden brand, which was intrinsically linked to the immensely successful Commodore brand, had failed to utilise equity into these markets.

Contentment Is Not the Same as Support

When a Holden Cruze caught fire late one night on the M1 on the way home from Brisbane Airport, nobody thought Holden was improving their commute.

A big thumbs up to Holden for offering a free replacement. It was thanks to service like this that Holden was able to earn the highest marks in 2018's customer satisfaction polls.

On the other hand, contentment does not always translate into promotion. Put a premium on happy customers. Prioritize customer advocacy ten times as much. Keeping customers happy requires addressing their concerns and meeting their needs, while fostering brand loyalty requires delivering on their expectations of value and quality.

Unlike satisfaction, which measures how someone feels after a sale has already been made (a lagging predictor), brand advocacy measures how likely someone is to recommend or repurchase a product (a leading indicator).

Have you experienced a quality issue with a nearly new Holden that Holden has resolved to your satisfaction? Absolutely satisfied. Incredibly appreciative and content.

How about another brand new Holden? In no way, shape, or form. Many people grew up dreaming of owning a Holden and were overjoyed whenever a neighbour got a new one. Our ancestors had likely purchased at least eight Holdens over the years. Twenty years after doubling up, a lot of people were leaving.

While this might not have happened to every customer, it's possible that many were having their own "gap truth" experiences.

There was a discrepancy between the advertised benefits and the actual product.

If You Want to Succeed, You Need to Zero in on a Specific Niche

Holden made a critical marketing misstep in 2005 that it has since repeated.

You're not currently in a leadership position as the third best-known brand. Market share can be defended, new customer groups can be targeted, and the leader's base can expand. The No. 3 brands with the steepest sales declines need to adopt a startup mentality.

You regain patronage by catering to a specific audience and following through on your promises.

Mark Harland, marketing director and customer experience at Holden, released a statement series in October 2017.

They need to differentiate themselves from the competition as more than just the makers of a great new Commodore, but also as an SUV and truck manufacturer with a presence in markets where they have not traditionally competed.

Car shopping is an emotional experience; as a marketing firm, they must adapt to meet the needs of their customers. (Regarding that very last statement, to do otherwise is business suicide.)

It appears that they are communicating with various individuals by making use of various properties. Supercars and their respective sports may still hold a special place in their hearts, and Holden can use these interests to reach out to their target audience.

Holden is also adding a number of additional properties to its portfolio. Holden, as an illustration, is a huge advocate for women's Australian Football.

As a result, efforts are being made to broaden the brand's outreach to include talking to even more women and younger people. That is through sports, sponsorships, or the various diversity initiatives Holden is pursuing, Mr. Harland said.

Mark Harland's attempt to turn around Holden's marketing may be viewed by many as one of the most challenging marketing tasks ever.

He'd have to battle accountants who stripped quality from cars and deal with the intense pressure of restoring Holden to its former position as industry leader.

The Australian automaker Holden announced at year's end that it would develop and introduce 24 new models by the year 2020.

Holden was able to reach out to nearly every market segment with its 24 new vehicle offerings because it shortened its product development cycle from 5 years to 3 years.

Definitely, the years 2017-2020 are a rehash of the years 2005-2010. Business leaders should take responsibility for their organisations' past errors and work to prevent a repeat. Had Holden forgotten how to treat their customers like people, how to be genuine and welcoming, and how to surprise them with the best possible service?

When Will We See Holdens Again?

Uncertain. By June, we expect to have ceased production of the vehicles.

General Motors has stated that the cost of maintaining Holden outweighs the profit it is making, therefore it will no longer invest in the brand.

There are, however, Holdens available for purchase right now. The interim managing director of GM Holden, Kristian Aquilina, has stated that this procedure could take "several months," with only a few thousand vehicles currently on the market or in the pipeline.

Therefore, time is of the essence if you wish to buy a brand-new Holden before even the shutdown; there won't be any left by the last day of the year.

What Will Happen to the Holden That You Currently Own?

Warranty, spare parts, servicing, and recalls will all be provided for at least another decade, according to GM.

Mr. Aquilina assures us that the operation of these solutions will remain unchanged.

General Motors promises that current Holden users will not notice any changes, as well as the company will keep a number of employees in place to ensure a seamless transition.

Although Holden has stated it will "build a nationwide after-sales system" to support current customers, it is unclear how this will be implemented.

According to the company's executives, who must be believed because Holden is obligated to continue supporting current owners for a set period of time, the company will do so for a full decade.

Holden provides at least ten years of parts availability, service, and support for new Holden buyers. As things stand, not much can be expected to alter.

How Many Jobs Will Be Eliminated?

Nearly 60% of Holden's current workforce of 800 will be laid off by the end of the year. After-sales teams are responsible for delivering on promises made to existing customers.

Mr. Aquilina emphasised the importance of considering every person as aspect of this change.

Holden will offer a suitable severance package, help with job placement, and transition assistance to those whose positions will be affected.

Holden has 185 car dealerships across Australia, and another 31 across the Tasman in New Zealand. GM is meeting with dealers for a "Q&A session," promising to "treat them fairly" in the transition and answering their questions.

We need to understand that the world will find out the truth about us eventually and that reputation is everything for a business.

If you want to get from where you are now to where you must be tomorrow, you have to confront the fact of what you undertake now.

Deficiency in brand awareness is the enemy.

Holden's vision, strategy, product focus, market focus, and operating model have all been set by a tiny number of company executives who did not pay attention to customers, resulting in a waste of the billions of dollars the federal state spends to keep Holden in the country. They've gone after the market by selling low-priced goods with a premium brand name attached.

It's humanly plausible, but morally repugnant. This is something that should never take place, but it does.

By the end of the century, Holden had already begun to deteriorate. Eventually, the decay would destroy the 150-year-old name, but it took nearly 20 years. Because of declining sales and the poisonous nature of hastily formulated strategies, the guiding principles of the brand became clouded.

One could safely say that the gap, the only real threat, had triumphed.

The General returned the brand to Detroit, where it now resides in a cellar alongside many other battered North American brands.

Perhaps some enterprising soul will acquire the domain and then do something enticing with it, bringing it to life once more.

The judgement was "dreadfully heart wrenching for the team at Holden," according to GM's senior vice president of international operations, Julian Blissett.

Mr. Blissett reported that the news was met with "lots of crying, lots of hugs" from employees.

Mr. Gardner expressed sadness "but not a substantial number of shock" at the news on behalf of the automotive industry at large.

For many years, if I'm being totally forthright, we've seen this coming," Mr. Gardner said.

"A sad day indeed. It's a tragic loss. But, in all candour, this is just the most recent (and hopefully last) chapter in a long slide."

Holden will be discontinued, but Chevrolet will proceed distributing the Camaro & Silverado towards the Australasia region through a newly proposed entity, General Motor Specialty-Vehicles, which will handle the distribution as well as conversion of key Chevrolet automobiles under the HSV arrangement.

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

Conclusion

General Motors, Holden's parent corporation, stated on Sunday that it would phase out the Holden nameplate in 2021. This is happening only three years after Holden's last assembly factory closed. The business maintains it made the choice to stop making the Holden line due to financial factors alone. The automotive industry in Australia is booming. The brand Holden fell short of its potential.

The "brand gap" exists in every company because there is always some distance between the actual product or service and the ideal image consumers have of it. As the decade ended and the new millennium arrived, Holden's fortunes began to fall. Its once-dominant position in the market has dwindled to 15% by 2006. Holden's decision in the early 2000s to save manufacturing costs marked the beginning of a period of significant brand gaps. In terms of new-car sales, Australia's market is among the most competitive in the world.

There is a lot of competition in the modern market, and brands who don't offer great service and competitive prices will have a hard time succeeding. While most Australians were busy finding ways to better connect with Anzac Day, Holden was busy de-Australia-ing the national emblem. Holden made a major blunder in marketing in 2005 and has continued to make the same mistake repeatedly since then. Focusing on a narrow market segment increases the likelihood of your business's success. Ten times as much emphasis should be placed on customer advocacy as brand advocacy.

In order to maintain a satisfied client base, it is necessary to listen to and respond to their problems and requirements. Many may consider Mark Harland's endeavour to revitalise Holden's advertising to be the single most difficult advertising challenge ever. Had Holden forgotten how to provide exceptional customer service, treat its clients like human beings, and wow them with unexpected experiences? We anticipate that Holden vehicle production will be ended by the end of June. General Motors has announced that it would stop investing in the Holden brand due to the fact that the costs of doing so exceed the profits being generated.

However, there are a few thousand cars on sale or in the works at the moment. A small group of Holden's top executives has established the company's mission, strategy, product priorities, market priorities, and operating model. They have entered the market by providing high-quality products at bargain prices. To a human mind, it makes sense, but to a moral mind it stinks.

Content Summary

• GM's local production in Australia came to a halt in 2016.
• GM has announced the Holden brand will be discontinued in New Zealand and Australia.
• This comes just 3 years after General Motors shut down Holden's final assembly plant, effectively turning the Australian automaker into an importer.
• Now for the thesis.... Holden was unable to close the product gap.
• All of these factors, however, can be boiled down to one simple principle: Holden was unable to bridge the gap between its brand promise and its actual performance.
• Big brand gaps began in the early 2000s, when Holden decided that reducing manufacturing costs was the best way to preserve its position as the market leader.
• When it comes to both variety and cost, Australia's new car market is among the most competitive on the planet.
• The problem is that the brand promise and the product experience are at odds with one another.
• Mark Harland, marketing director and customer experience at Holden, released a statement series in October 2017.They need to differentiate themselves from the competition as more than just the makers of a great new Commodore, but also as an SUV and truck manufacturer with a presence in markets where they have not traditionally competed.
• Mark Harland's attempt to turn around Holden's marketing may be viewed by many as one of the most challenging marketing tasks ever.
• The Australian automaker Holden announced at year's end that it would develop and introduce 24 new models by the year 2020.
• Holden was able to reach out to nearly every market segment with its 24 new vehicle offerings because it shortened its product development cycle from 5 years to 3 years.
• General Motors has stated that the cost of maintaining Holden outweighs the profit it is making, therefore it will no longer invest in the brand.
• Nearly 60% of Holden's current workforce of 800 will be laid off by the end of the year.
• Deficiency in brand awareness is the enemy.
• By the end of the century, Holden had already begun to deteriorate.
• The General returned the brand to Detroit, where it now resides in a cellar alongside many other battered North American brands.