Driving the Change

Reilly is in Australia for a series of meetings and had good and bad news when interviewed this week.

He said the strength of the Aussie dollar meant local component suppliers were having trouble clinching export orders, something essential if Australia was to keep a viable manufacturing base.

Holden's manufacturing plants were working at near-capacity with nearly 50 per cent of production being exported, but component suppliers had to have other outlets if they were to stay profitable.

“We need a supply network that can provide us with competitive quotes on components,” he said.

Quite a few component suppliers have gone to the wall recently.

“Obviously that's a concern. The exchange rate is not helping them. If they are going to be competitive, generally speaking, they will need some export business as well.”

He said as far as Australia was concerned the Commodore was here to stay, at least in the short and mid-term. HSV would continue to build big V8 performance cars although there was every chance there would be fewer of them in the future; and he admitted GM had been caught short by Toyota's successful sales push and the market's acceptance of a small hybrid Prius.

In GM's case, he said, hybrids would almost certainly be first seen in large cars rather than smaller ones because it was where the biggest fuel and emission savings could be made.

He said GM had not been idle when it came to alternative means of vehicle propulsion citing GM hybrid systems in buses and large SUVs, and the fact that the Volt, an all-electric GM car, will go on sale globally in 2010.

Hybrids, he said, made sense environmentally but not economically, and he stressed GM was not putting all its eggs in the hybrid basket. Liquefied petroleum gas, compressed natural gas, fuels with 85 per cent ethanol and diesel all had a part to play when it came to alternatives.

He said there was every chance a hybrid Commodore would appear at the same time as a diesel-powered version, though neither of those options was likely for a couple of years.

He said the market segments in Australia had changed rapidly which had not helped the large car. “We are looking at offering a different portfolio (of vehicles) which we have already started to do. We don't have to change the manufacturing because we are now up to nearly 50 per cent being exported,” he said.

His faith in the large car was reinforced by sales figures for Buick.

“The growth in top-end large luxury cars in China is huge. We sell, now, more Buicks in China than we do in the US,” he said. “The same in India. But these markets do have segments that are emerging that are low priced. You have to be able to compete . . . and that is a change for GM.”