GM to Transition to a National Sales Company in Australia and New Zealand

[Ringo64]

Company to cease manufacturing in Australia by 2017

DETROIT – As part of its ongoing actions to decisively address the performance of its global operations, General Motors today announced it would transition to a national sales company in Australia and New Zealand. The company also said it would discontinue vehicle and engine manufacturing and significantly reduce its engineering operations in Australia by the end of 2017.
“We are completely dedicated to strengthening our global operations while meeting the needs of our customers,” said GM Chairman and CEO Dan Akerson. “The decision to end manufacturing in Australia reflects the perfect storm of negative influences the automotive industry faces in the country, including the sustained strength of the Australian dollar, high cost of production, small domestic market and arguably the most competitive and fragmented auto market in the world.”
As a result of the company’s actions, approximately 2,900 positions will be impacted over the next four years. This will comprise 1,600 from the Elizabeth vehicle manufacturing plant and approximately 1,300 from Holden’s Victorian workforce.
Holden will continue to have a significant presence in Australia beyond 2017, comprising a national sales company, a national parts distribution centre and a global design studio.
GM Holden Chairman and Managing Director Mike Devereux said an important priority over the next four years would be to ensure the best possible transition for workers in South Australia and Victoria.
“This has been a difficult decision given Holden’s long and proud history of building vehicles in Australia,” said Devereux. “We are dedicated to working with our teams, unions and the local communities, along with the federal and state governments, to support our people.”
The sale and service of Holden vehicles will be unaffected by this announcement and will continue through the extensive network of Holden dealers across Australia and New Zealand. Warranty terms and spare parts availability will remain unchanged.
“GM remains committed to the automotive industry in Australia and New Zealand. We recognize the need for change and understand the government’s point of view. Moving forward, our business model will change significantly however, GM Holden will remain an integral part of its communities and an important employer both directly and through our dealers,” Devereux said.
Since 2001, the Australian dollar has risen from US$0.50 to as high as US$1.10 and from as low as 47 to as high as 79 on the Trade Weighted Index. The Australian automotive industry is heavily trade exposed. The appreciation of the currency alone means that at the Australian dollar’s peak, making things in Australia was 65 percent more expensive compared to just a decade earlier.
With the decision to discontinue vehicle and engine manufacturing in Australia by the end of 2017, GM expects to record pre-tax charges of $400 million to $600 million in the fourth quarter of 2013. The charges would consist of approximately $300 million to $500 million for non-cash asset impairment charges including property, plant and equipment and approximately $100 million for cash payment of exit-related costs including certain employee severance related costs. Additional charges are expected to be incurred through 2017 for incremental future cash payments of employee severance once negotiations of the amount are completed with the employees’ union. The asset impairment charges will be considered special for EBIT-adjusted reporting purposes.



About General Motors Co.
General Motors Co. (NYSE:GM, TSX: GMM) and its partners produce vehicles in 30 countries, and the company has leadership positions in the world's largest and fastest-growing automotive markets. GM, its subsidiaries and joint venture entities sell vehicles under the Chevrolet, Cadillac, Baojun, Buick, GMC, Holden, Jiefang, Opel, Vauxhall and Wuling brands. More information on the company and its subsidiaries, including OnStar, a global leader in vehicle safety, security and information services, can be found at http://www.gm.com.

Kind of depressing that Holden will end, a story that is very close to our hearts as Pontiac as Holden used to be excitement of the Aussies.

[Frosty]

Ford announced they were no longer going to build the Falcon in Australia any longer. I tihnk that just leaves Toyota manufacturing cars in Australia after 2017. Not a good sign for the Australian economy either. The announcement really didn't say were "Holdens" would be manufactured in the future either. I imagine will be on a platform by platform basis decision. Buick's from China anyone?

[[ChaosweaveR]]

The costs of living in Australia are pretty high, higher than what we're used to.

For example...want a new luxury SUV? They'll pay around $100,000 AUS for one, that's about $90K in US. There's so much tax on EVERYTHING, I think Ford and GM just can't afford to build there anymore. Sucks to see.

[Ringo64]

The costs of living in Australia are pretty high, higher than what we're used to.

For example...want a new luxury SUV? They'll pay around $100,000 AUS for one, that's about $90K in US. There's so much tax on EVERYTHING, I think Ford and GM just can't afford to build there anymore. Sucks to see.

My cousin used to live in Australia, it's ridiculous... He moved to New Zealand recently and its a bit better but still much more than US (obviously being an island on the side of the world.

[Ringo64]

Hi everyone,

Following on from our announcement last Wednesday that we are becoming a full-line importer, we’ve had feedback from customers and the public across our Social Media communities. Many of you have questions, and we’d like to take a moment to try and answer a few of the more commonly asked questions.

Before we do that, we’d just like to thank everyone for their comments and feedback. We have been overwhelmed by the support we have received. It’s great to read about people’s favourite Holdens and memories, and fantastic to see there are still so many passionate supporters of Holden, the brand, our cars, and our people.

_ _ _ _ _

1. Is Holden leaving Australia?

No. We’re here to stay. Holden will continue to have a significant presence in Australia from 2018, comprising a national sales company, a national parts distribution centre, and a global design studio all supported by a limited number of local engineers.

We remain very committed to the automotive industry in Australia and New Zealand. While our business model will change significantly, we and our dealers will remain an integral part of communities across Australia and New Zealand, and will remain an important employer both directly and through our dealers

The sale and service of Holdens will be unaffected by this announcement and will continue through the extensive network of Holden dealers across Australia and New Zealand. Warranty terms and spare parts availability will remain unchanged and as strong as ever.

_ _ _ _ _

2. Why did GM decide to stop manufacturing vehicles in Australia?

There is no one factor. A raft of economic drivers have worked against continuing to manufacture vehicles locally. Australia’s automotive industry is up against a perfect storm of negative influences, including the sustained strength of the Australian dollar, high cost of production, relatively small domestic market and arguably the most competitive and fragmented auto market in the world.

The extent of the competition and fragmentation in the Australian market is highlighted when compared to other global markets. For instance, Australia has 51 brands of passenger car on sale compared to 43 brands in the United States, yet the American passenger car market is about 16 times larger than Australia’s.

Cruze is made in 11 plants around the world, most of which also export it. While there is some global demand for large rear-drive cars like Commodore and Caprice, the high Australian dollar means Holden’s export programs are running at a loss.

All three vehicle manufacturers in Australia deal with the same issue regarding the extra cost of manufacturing cars in this country. For Holden, it costs $3,750 more to produce cars here than in some overseas plants, including higher labour, transport and supplier costs.

Since 2001, the Australian dollar has risen from US50c to as high as US$1.10. The appreciation of the currency alone means that at the Australian dollar’s peak, making things in Australia was 65 percent more expensive compared to just a decade earlier.

The sustained and unprecedented strength of the Australian dollar, combined with the weakening of currencies of our imported competitors, means importers are at a significant advantage.

In planning for the next generation of Commodore and Cruze models due later this decade, we have looked at every possibility to make those business cases stack up. Unfortunately, there is no viable way to make the numbers work.

_ _ _ _ _

3. Is it because you didn’t sell enough Cruzes and Commodores?

This year, Holden’s new VF Commodore has been the fourth most popular passenger car, while the locally made Cruze small car is the fifth most popular passenger car in the country. We build and sell two of the top five best-selling passenger cars in the country. Clearly we are building cars that are popular with many Australians – to suggest otherwise is to simply ignore the sales figures.

Holden is currently the second best-selling brand in Australia. We fully intend to strongly market the Commodore, Cruze and the rest of our product range so that we maintain our market presence through this transition period.

Over the next four years, we literally have hundreds of thousands of engines and vehicles to build. We know our manufacturing and engineering employees will take great pride in their work until the very last car rolls off the line in late 2017.

And it’s not just the sales figures that speak volumes. In the past 2 months alone we have won the following industry awards:

• Carsales Peoples Choice Award, Best Family Car over $30K - VF Commodore Sportwagon

• Car of the Year, Behindthewheel.com.au - VF Commodore

• Australia Best Cars Awards, Best Large Car under $60K - VF Commodore SV6

• Wheels Australia Gold Star Value Award for VF Commodore Evoke LPG

• Wheels Australia Gold Star Value Award for the VF Calais V-Series V6

• Wheels Australia Gold Star Value Award for the WN Caprice V V8

• Wheels Australia Gold Star Value Award for the Captiva 7 SX 2.4L

_ _ _ _ _

4. What sort of return has there been on the investment governments have made in Holden?

On average, Holden received about $150 million per year from the Australian Government since 2001. Nearly all of this – about $120 million a year – was returned to the Australian Government just in the income tax revenue from the wages Holden pays to its employees. Each year Holden spends - on average - $490 million in capital, engineering and design investment; $490 million on wages, the vast majority of which goes back into Australian communities; and $1.75 billion on Australian supplier businesses.

The $275 million co-investment announced in March 2012 with the Federal, Victorian and South Australian Governments has not and will not be received, following this announcement

Since 2001 Holden has spent $32.7 billion in the Australian economy designing, engineering and building cars. In that time we received $1.8 billion in government assistance. Holden thanks federal and state governments for their support over many years. As we transition to being a full-line importer, we intend to continue to be a significant employer in Australia through our extensive dealer network, head office, sales and spare parts operations and Global Design Studio.

_ _ _ _ _

5. How will you support impacted staff?

This is a tough time for staff, particularly for our manufacturing and engineering employees, for their families and for their communities and colleagues across the rest of the business.

We know this decision is extremely disappointing to our teams in South Australia and Victoria. We will be working with our teams, unions and the local communities, along with the federal and state governments, to support our people.

Holden will begin meetings with our employees, the Federal Government, the South Australian and Victorian governments, unions, suppliers and other industry participants to develop transition plans for affected staff and the communities in which they live.

Our employees are great Australians. They produce world-class cars. They have made sacrifices to keep producing world-class cars. Unfortunately, the economic and market realities have been working against them.

_ _ _ _ _

6. Will Chevrolet replace the Holden brand?

No. Holden is here to stay.

_ _ _ _ _

7. What cars will Holden sell in the future?

We will build and sell two of Australia’s most popular cars – the Commodore and Cruze – as well as Ute and Caprice over the next four years. Thereafter, Holden will continue to seek out the very best from GM’s Global Product Portfolio and sell the very best vehicles to Australians. We would not discuss in detail our future product portfolio this far out.

_ _ _ _ _

8. How will you work with suppliers?

We will continue to have a close relationship with our suppliers and work through the transition process. All supplier contracts will be honoured as per the applicable terms and conditions. We will continue to work with federal and state governments and industry bodies on the transition process.

_ _ _ _ _

9. How will you support dealers?

Our network of more than 230 dealers across Australia has been a tower of strength for the Holden brand throughout our history. From a customer and a dealer perspective, it is business as usual. Holden is here to stay.

We currently have hundreds and thousands of engines and vehicles to build over the next four years. Over this time, we will continue to market our world-class locally-manufactured Commodore and Cruze, as well as our imported vehicles: Trax, Captiva, Malibu, Colorado, Barina.

Currently about half of the vehicles we sell in Australia are imported. From 2018, we will become a full line importer, seeking the very best from GM’s Global Product Portfolio to sell the very best vehicles to Australians.

The sale and service of Holdens will be unaffected by this announcement and will continue through the extensive network of Holden dealers across Australia and New Zealand. Warranty terms and spare parts availability will remain unchanged and as strong as ever.

_ _ _ _ _

10. How will you support owners and customers?

For Holden customers, nothing changes. Servicing and the availability of parts are all unaffected by this announcement, as are our warranty and roadside assistance programs. Together with our network of over 230 dealers nationwide, we will continue to provide you with exceptional service and support.

From Holden's FB Handle

[[ChaosweaveR]]

Good to see Holden isn't afraid to talk to their customers and fans.

[Ringo64]

Good to see Holden isn't afraid to talk to their customers and fans.

Yup, think they're handling that aspect very well. I have been apart involved in the acquisition of other companies and changes like this, and mostly aren't really this forthcoming after an announcement. It can have a profound affect on your customer-base.

[[ChaosweaveR]]

GM North America should take notes.