Punch deal to save Holden factory is dead

The plan to save the Holden factory was never going to happen, but that didn’t stop politicians from backing the proposal.

A highly ambitious plan by a Belgian entrepreneur to save the Holden factory has been canned.

A joint statement from General Motors and businessman Guido Dumarey of Punch Corporation issued late Friday said: “Both parties concluded that a viable business model was not possible. Therefore the proposal will not be taken forward.”

The challenges to domestic automotive manufacturing in Australia persist and cannot be overcome for this business case.

Despite the apparent backing of federal politicians from both sides of politics, including Kim Carr and Christopher Pyne, the deal never stood a chance, say industry observers, because the factory would not have produced enough volume to support a supplier base.

Mr Dumarey wanted to sell the Holden Commodore sedan, wagon and ute under another name, and rely on exports to boost production -- if the Australian dollar remained low.

“General Motors and Punch Corporation have undertaken and completed a detailed global evaluation of a proposal from Punch Corporation to continue manufacturing vehicles at Holden’s Elizabeth plant in South Australia,” the statement said.

“The challenges to domestic automotive manufacturing in Australia -- lack of scale, high production costs, supply base contraction and increasing market fragmentation -- persist and cannot be overcome for this business case.

“In particular, the wind down of the supply base following the manufacturing exit of the three existing car makers, and the critical production mass they represent, is insurmountable.”

General Motors said there would be no further discussion over the failed deal because the terms have been governed by a Non-Disclosure Agreement.