GM Holden has turned in a $152.8 million after-tax profit for 2016, its second consecutive win after years of posting losses, but the result relied on big handouts from parent General Motors and Australian taxpayers.
The positive result was despite falling sales. Holden sales have not recovered from a slide that saw its 2012 market share of 10.3 per cent being clipped to eight per cent in 2016.
It has sold 25,923 vehicles in the first four months of 2017, down 11.3 per cent on the same period in 2016, and market share is now 7.2 per cent – its lowest market share since Holden made its first car in 1948.
Holden made 38,677 vehicles in Australia in 2016, down from 56,786 in 2015, with 4191 exported. The previous year, exports numbered 10,452.
Production included 38,677 V6 engines made at the now-closed Port Melbourne factory. Holden also reduced capacity at its Port Elizabeth plant in Adelaide, ending the career of the Cruze.
Holden said that if it continued manufacturing in Australia it would have plunged it back into the red.
Holden this week said the local manufacturing division made a loss of $54.1 million in 2016, but the overall profitability was attributed to its new-found strength as an importer, plus some financial help from its friends.
The company, closing in on exiting its manufacturing division in October, reported a $125 million profit from manufacturing and an extra $27.3 million contribution from its sales arm that comprises imported vehicles.
Like Ford and Toyota, Holden has been the recipient of the federal government's Automotive Transformation Scheme (ATS) in 2016 that was aimed at maintaining a competitive manufacturing industry and workforce.
The ATS slipped $51.4 million into Holden's back pocket in 2016 while GM in the US sent a $128.2 million cheque to cover the wind-down of the manufacturing arm and to cover exiting workers.
Though Holden has reported a $125 million profit from manufacturing, it actually made a loss. Add the $128.2 million that was gifted from General Motors and the $51.4 million from the federal government's ATS program and that shows a $179.6 million extraordinary payment that reduces the manufacturing effort to a $54.1 million loss.
Holden reported a $128.2 million after-sales profit in 2015 – its first in five years – that came as a welcome change from the disastrous $255 million loss in 2014 and the even larger $553.8 million loss of 2013.
Holden, in a statement today announcing its profit figures, said that if it continued manufacturing in Australia it would face additional costs that would have plunged it back into the red.
"Accounting for financial support payments and projected future depreciation, local manufacturing operations would have recorded an appropriate $180 million loss," it said.
The financial report card for 2016 included the fact Holden paid $188.1 million in taxes and invested $69.1 million in research and development.
Holden will, from the fourth quarter of this year, become an importer. It is sourcing its vehicles line-up from Europe, the US, Thailand and Korea, with its main arsenal coming in the form of the Opel-based large car to replace the current Commodore, and SUVs from Europe and Korea.
Will Holden be able to stay in the black after local manufacturing ends in October this year? Tell us what you think in the comments below.