Carmaking viable here, says Holden

Holden says its car-making operations in Australia are viable and sustainable but it doesn't expect to increase imports while the dollar remains high.

The company says car producers in Australia continued to face tough conditions with disrupted supplies of components, unfavourable exchange rates and stronger competition from importers. 

But Holden had made fundamental improvements to its cost base over the past two years, Kapitelli says, and the savings reflected in a brighter longer-term outlook for the company. 

"Plant utilisation has increased considerably and local production is viable and sustainable with two car lines at Holden vehicle operations," Kapitelli says.

Holden's assessment of its business, which includes the vehicle assembly plant in Adelaide and the Melbourne engine production facility, came as the company yesterday posted an $89.7 million after-tax profit for 2011, with the result hit by a softening large-car market and a shortage of some imported vehicles, including Barina and Captiva.

Holden says its revenue was down to $4.3 billion last year, from $4.4 billion in 2010, while its profit result compared to the $112 million net profit the company reported in 2010.

The 2011 profit was the same amount as it received in assistance from the Federal Government ($89.7 million), but Kapitelli says the commonwealth funds came with some spending requirements, including local investment in research and development.

He says the company's second consecutive year of profit was driven by the success of the Australian-built Cruze small car and the leaner cost structure. 

"After the financial crisis, we reshaped our business to improve structural cost, reduce our reliance on exports and bring the Cruze into local production so we could continue to make cars in Australia," he says. "We could be a very profitable importer, no question about that, but we have chosen to make a long-term commitment to advanced manufacturing in Australia."

Holden says local vehicle production was up 36.8 per cent in 2011, with 90,424 cars built at its assembly plant in South Australia, compared to 66,061 in 2010. Engine production in Melbourne rose 2.9 per cent to 101,019.