Farewell to Australia’s mightiest car company, Chinese manufacturers move to fill the gap, and the one country on Earth that actually has the political will to ban lots of things thinks about banning gasoline. All that and more in the Morning Shift for February 18, 2020.
Holden is dead. We’ll have a proper obituary in a bit, but the big news is that Holden, the 164-year-old company that began by making saddles for horses and became General Motors’ Australian branch in 1931, will officially be defunct in 2021.
GM’s official statement announcing the shut down of Holden basically points the finger at globalization and the company’s own insatiable thirst for fat margins and big profits:
GM has taken this difficult decision after an exhaustive analysis of the investment required for Holden to be competitive for the long term in Australia’s and New Zealand’s new car markets. Regrettably, this assessment determined such an investment could not meet GM’s investment thresholds, including delivering an appropriate return.
Factors weighing against further investment in Holden included: the highly fragmented right-hand-drive domestic markets; the economics to support growing the brand; and delivering an appropriate return on investment.
More broadly is the issue of scale. The global consolidation of the automotive industry has made it increasingly challenging to support a brand and a business that operates in only two markets, which represent less than one percent of the global industry.
In short, it just wasn’t worth the effort to have an entire car company just for Australia and New Zealand, and more specifically. That sort of thing may have made more sense in 1931, when there were a lot of people in Australia who wanted cars and it cost a lot of money to engineer, build, and ship them all the way over from Detroit (which is where they made the cars back then, of course), but GM’s calculus now is that Australians will just have to buy the Toyotas that everyone else enjoys.
GM isn’t saying as much, but there’s also a bit of an implication that the closure of Holden is related to GM’s sale of Opel/Vauxhall to Peugeot, as it has now decided to get out of the right-hand-drive game entirely. While GM stopped making cars specifically for the Australian market in 2017, it was still making right-hand-drive versions of its global cars for Australia. Once the company stopped making cars for the British market under the Vauxhall name, that was one less market for cars with the steering wheel on the wrong side. The only RHD markets left for the company were Australia and New Zealand, and it apparently wasn’t worth it to keep that going, the company said in an FAQ:
Wouldn’t it have been better to close Holden when local manufacturing ended?
We believed at the time that Holden could continue as a full-line importer.
While the news is woefully depressing for anyone with a pulse that loved the wild steroidal utes to come out of the continent, it’s not like its demise was completely unexpected. Australian production ended in 2017, and for the past few years Holden has mostly just sold boring badge-engineered Chevrolet SUVs.
What is shocking is how Holden went from the top of the Australian market to completely dead in less than two decades, as we noted back in December:
It was as late as 2002 that Holden was the best-selling brand in Australia, but this year, according to The West Australian, it is down to 4.2 percent market share, down from 5.3 percent last summer, with September “the first time the brand had ever failed to sell 3,000 vehicles in a month.”
Former Holden chairman David Buttner, who once went on-the-record to say he wouldn’t work at Holden only to close it down, left the company in December. At the time, he claimed he was leaving for “personal reasons,” though right now it looks like he might as well have said “personally, I will not close this company down, so I am leaving.”
And while it’s simple to say “no more Holden, that’s done,” it’s a little more complicated than that. GM says it’ll continue to service Holden vehicles for the next ten years, but there are still some details to work out. There’s the company’s Lang Lang Proving Ground, which GM is only saying it will “explore options” for. There was HSV, which made super-fast versions of normal Holden cars, and which will now do... something, according to the FAQ:
What happens to HSV?
We plan to focus our growth strategies in these markets on the specialty vehicles business and plan to immediately begin work with our partner on that focus.
If you can figure out what that means, please do let me know.
And then there’s Holden’s Australian Supercars race team. The only thing GM is saying is that it’s “aware of our commitment” and that it will “work through” the “implications of this decision.”
Entirely left unsaid by the company is how many people will be laid off, though the earliest estimate is around 600 workers. GM CEO Mary Barra, however, appears to be trying to spin this as some sort of arduous moral calling, rather than a cold, calculated business move, saying that “I’ve often said that we will do the right thing, even when it’s hard, and this is one of those times.”
I am sure GM’s laid off workers will find solace knowing that their job loss was not the result of corporate mismanagement that drove an entire continent’s strongest car company straight into the ground, but the result of doing the right thing.
Goodbye Holden. You gave Americans the Pontiac GTO and the Chevy SS, and those were good cars.
Okay, the SS was good. The GTO was fine, I guess.
I’m not going to get into the smarmy jingoism of What This All Means For America, as that is dumb. What’s notable about the fallout from the collapse of GM’s Australian business, though, is that GM will also be selling its Rayong manufacturing plant in Thailand to none other than Chinese car company Great Wall.
Here’s the Bangkok Post:
US car giant General Motors (GM) has agreed to sell its Rayong manufacturing base to Great Wall Motors of China.
The two firms signed a binding-term sheet for the transfer of GM Thailand’s vehicle assembly factory and GM Powertrain Thailand’s engine plant to Great Wall this year.
GM will cease Chevrolet vehicle sales in Thailand later this year but will provide ongoing after sales, warranty and repair work for more than 300,000 Chevrolet customers through its authorised service outlets.
Before y’all start going on and on about how companies need to re-evaluate strategies thanks to electrification, know in your heart that General Motors reported an EBIT-adjusted income of $8.4 billion in 2020. GM is fine.
I know that state intervention in national economies can get extremely messy, but what the hell, Americans give out corporate subsidies like they’re going out of style. If you’re going to be throwing government cheese around left and right, you might as well get some return for it, right? At least, that’s what France is doing when it comes to Renault, Reuters says:
French Finance Minister Bruno Le Maire warned Renault (RENA.PA) on Tuesday against shutting factories in France and cutting jobs there after the carmaker announced “no taboos” cost cuts last week.
“The state will play its role as shareholder in Renault to make sure that the choices which will be made will not go against jobs and factories in France,” Le Maire told journalists in Brussels, adding the government would talk with the carmaker and remain “very vigilant” on its cost cuts strategy.
The French state owns a little more than 15 percent of Renault. Both France and Renault will be fine, too.
I give a slight chuckle any time I hear some politician blathering on about how they’re going to ban petroleum-powered cars by the year 3267 or whatever, because politicians know they’ve got five, maybe ten years, tops, when they’ve got real power. After that they’re either dead or retired or term limited, so they can promise anything they want for the next few decades, knowing they will never be held accountable for those promises or forced to pay the bill.
But now Singapore is going the same route, and it may actually have a shot (again, from Reuters):
The wealthy city-state of 5.7 million, which is hiking investment in flood defences, joins Norway, Britain and others in setting a target to cut the use of vehicles with combustion engines.
“Our vision is to phase out ICE (internal combustion engine) vehicles and have all vehicles run on cleaner energy by 2040,” Finance Minister Heng Swee Keat said in his budget speech.
Singapore’s a tiny island country that’s particularly threatened by climate change, but unlike Norway and Britain, it’s not exactly a democracy. It’s more like a benevolent dictatorship. Sure, people are mostly happy and relatively there aren’t very many poor people, but if you’ve got enough weed on you to sell, well, they’ll kill ya. A straight-up execution for the sort of thing that’s legal in a bunch of countries and a smattering of American states.
So, you know, pluses and minuses.
But because Singapore’s People’s Action Party is so entrenched in power, it may actually have a shot at banning internal combustion vehicles in 20 years.
If we’re all still around in 20 years, that is.
Owen Bieber, who led the United Auto Workers throughout much of the 1980s and early 1990s, has died at age 90. Bieber was known both for leading the union as the Big Three emerged from the Malaise Era, as well as for his strong principled stances for causes around the world. Here’s the Associated Press:
Under Bieber, the UAW also actively supported the Solidarity labor movement, which challenged Poland’s Communist government, and the anti-apartheid movement in South Africa. Bieber traveled to South Africa twice, raising the alarm about the imprisonment of labor activists and smuggling images of torture out of the country. In 1986, he was arrested while marching at the South African embassy in Washington D.C.
When former South African President Nelson Mandela toured the U.S. after his release from prison, Bieber stood at his side during a rally in Detroit. In 2003, Archbishop Desmond Tutu singled Bieber out during a visit to Grand Rapids, Michigan.
“We came asking for help, and you gave that help and accomplished this extraordinary thing,” Tutu said, according to the UAW.
That’s not a bad run for anybody. He’ll be missed.
The first circuit motor race, the Course du Catalogue, run over two laps of a 45 mile triangular course at Melun in France, was won by Léonce Girardot in a Panhard.
I just like saying “Maloo.” Go on, try it. “Maloooooooooo.” “Maahhh-loooooooooooooooooooooo.”