Opinion

As if the collapse of the entire Australian car manufacturing industry isn’t enough to deal with, now the Productivity Commission wants to import cheap second-hand cars by the shipload. On the surface this may sound like a great idea to provide affordable motoring to the masses. But in reality it would be a disaster, in automotive terms, equivalent to letting in myna birds, cane toads and other imported pests. For starters, used cars from Japan won’t be any cheaper than the secondhand vehicles that were designed and engineered for our conditions. Presumably the Productivity Commission made this suggestion so it could hold a gun to the industry’s head, in case anyone thought about raising prices once Australia doesn’t have a car manufacturing industry to protect. But the Productivity Commission clearly hasn’t read its own report. Australian new-car prices are at 20-year lows, we are the most competitive new-car market in the world, with more than 65 brands on sale here (30 per cent more than North America and Europe). It’s why the Australian car manufacturing industry is on death row. Cheap new cars, in turn, drive down used car prices because people would rather treat themselves to new-car smell than buy someone else’s old banger. So that’s the first myth busted. The other issues are more serious. “Grey import” is the term given to cars that were never sold as new in Australia even though they wear familiar badges from Toyota, Nissan, Honda, Mazda and others. No-one knows why they are called “grey” imports. Perhaps it’s because they fall into a grey area when it comes to getting them fixed. Although Toyota, Nissan, Honda, Mazda et al made the vehicle, if they didn’t intend them to be sold here then they’re not obliged to stock parts. Under the current grey import rules we already bring in specialist models in relatively small numbers for enthusiast buyers who know what they’re getting into (the curvy Nissan S-Cargo van that looks like a snail, or the cheeky Nissan Figaro convertible that looks like a Noddy car). But any move to open the floodgates to de-restrict grey imports has the potential to leave car buyers open to fraudulently-certified, unsafe and potentially stolen vehicles that will be expensive to insure because parts will be difficult to source -- serious issues which consumer bodies and the industry have aimed to fix over the past decade or more. News Corp Australia Cost of Living Editor John Rolfe has already exposed some of the widely known rorts used by a number of existing dealers of grey import cars. It’s next to impossible to track the true history of the vehicle, so you don’t know how far it’s really been driven, if it’s been pieced together from two or more cars after a major crash, or indeed if it’s been stolen and given a new fake identity. It’s true that some of the parts on grey import cars sold here fit some of those originally sold in Japan -- the silver lining that the grey import industry likes to peddle -- but it’s certainly not the majority. The rorting of grey imports is so rife I once had a very well known dealer of such vehicles say to me “we don’t wind back speedometers on cars any more than the other guys do”. The grey importers are good at supplying what appear to be legitimate documents. If there’s nothing to hide why did some of the bigger grey importers come down heavy -- and by heavy, I mean violence was allegedly threatened -- recently on an enterprising local who found a way to source a more accurate history check on the cars coming from Japan? So, exactly how has the whole grey import industry been able to prosper in Australia? Japan taxes cars at a higher rate once they reach three years old, so second-hand cars are cheap there and dealers from other countries snap them up because they can make a bigger profit even though they have to ship a car across an ocean. Japan imposes the high tax rate on older cars to keep its automotive manufacturing economy moving. So not only would Australia be taking care of Japan’s scrap, we would be, by default, propping up Japan’s car industry even further. Mass-market grey imports do have a place in the world: they make perfect sense for developing countries in the Asia-Pacific region. But they make no sense for Australia. New Zealand de-restricted grey import cars when its car manufacturing industry shut in the 1990s. But the New Zealand government of the day had different reasons to open its doors to these cars. It needed to provide the masses with newer and more affordable secondhand cars as the average age of vehicles on the road there was among the oldest in the developed world. In other words, grey imports were a step forward for the New Zealand motoring public, even if it put a sizeable dent in new car sales at first. The downside is “grey imports” are so rife that the average age of cars in New Zealand is now increasing and they are potentially having the opposite effect. In Australia, we’ve worked hard to cram airbags into cars and insist on a higher level of safety for vehicles imported here. And to record the lowest road toll in 89 years in 2013, in which newer cars played a significant role. To think that the Australian Government would lower the bar and make car buyers more vulnerable to fraud, dodgy repairs and infect the market with less safe vehicles is beyond comprehension. This reporter is on Twitter: @JoshuaDowling

Don't hold your breath for a new-car bargain once the last of Australia’s car factories close by the end of 2017. If anything, prices may rise. Toyota, Holden and Ford have been force-feeding locally-made cars onto dealers and fleet buyers at ridiculously discounted prices for years, just to keep their factories running. Late last year Toyota was offering the new Camry for $26,990 drive-away, about $8000 off the full RRP. Early last year, the Cruze became the cheapest locally-made Holden in almost 20 years when its RRP dropped below $20,000. But deals like these will likely evaporate once the Toyota Camry and Holden Cruze -- and the vehicles that will replace the Ford Falcon sedan and Territory SUV -- are fully imported. Toyota, Holden and Ford will be able to simply order the number of cars they think they can comfortably sell without flooding the market. And, of course, it goes without saying that government departments will no longer be forced -- or encouraged, as it is called -- to buy locally-made cars. This preferential treatment has artificially inflated the true demand for Australian-made vehicles for decades. Which is why secret internal forecasts by Toyota, Holden and Ford show demand for the cars that will replace their locally-made models will be slashed. Toyota forecasts demand for the Camry could be cut by more than half. Holden and Ford are similarly pessimistic. How many Falcon buyers will take to the new Mondeo, its likely replacement? Ford sold just 10,000 Falcons last year compared to just 3000 Mondeos. Likewise, how many Holden customers will find a front-drive four-cylinder or V6 sedan appealing, whether or not it has a Commodore badge? If the recent lacklustre response to the Holden Malibu sedan is a guide, not many (1300 deliveries last year compared to the Commodore’s tally of 27,000). Without an oversupply of vehicles or the desperate need to keep a factory to keep running, there will be no need for Toyota, Holden and Ford to discount so dramatically. Instead, they will compete on a relatively even footing as vehicle importers with the other 60 or so brands in Australia. Which is why currency exchange rates, not tariffs, will play a greater role in determining car prices in the future. The Federal Chamber of Automotive Industries, the peak body that has been all but silent as the industry crumbled over the past eight months, this week called for all import tariffs on motor vehicles to be scrapped now there is no local industry left to protect. “Post-manufacturing, there is no rationale to maintain the 5 per cent tariff on imported motor vehicles,” the chief executive of the FCAI, Tony Weber, said in a media statement. But this posturing by the FCAI is unlikely to have the Federal Government quaking in its boots. Australia is heading down that path anyway. The Federal Government is keen to create the perception that car prices will drop once it pushes ahead with more Free Trade Agreements. We already have FTA deals with North America and Thailand, but Japan and South Korea are set to follow. These four countries alone accounted for almost 75 per cent of all imported vehicles sold in Australia last year. You might expect South Korean giant Hyundai, its sister company Kia, and Holden (it sources most of its passenger cars and SUVs from South Korea) to be delighted about the prospect of a zero tariff. But they’re more worried about currency fluctuations.  The chief executive officer of Hyundai in Australia, John Elsworth, a former high-ranking Holden executive, says currency will continue to be a greater factor in vehicle pricing because import tariffs are already so low -- and currencies can swing by more than 5 per cent in a day, let alone across a month or a year. Indeed, there has been a more than 60 per cent fluctuation in the Australian currency over the past decade. In the year 2000 one Australian dollar bought an average of US0.63 cents; last year it bought a peak of US$1.04 and we’ve been tracking mostly above US0.90 cents since. Add to the mix the impact foreign governments can have on exchange rates. Japan, for example, has been accused of artificially devaluing the Yen over the past 12 months to boost exports. It partly explains why the prices of the imported Toyota Corolla and Nissan Pulsar and other Japanese cars are at 20-year lows. Who knows what Australia’s exchange rates will be like four years from now? The car companies -- and the government for that matter -- certainly don’t. “The biggest variable is obviously exchange rate (and) that can fluctuate daily in both directions,” said Mr Elsworth. “Reacting to that and shifting prices wouldn't make sense -- you have to work longer-term in this business.” In other words, car companies ride the currency wave. Some months they make less profit, some months they make more. Sometimes they get caught short, and start discreetly deleting standard equipment from cars hoping customers won’t notice, such as a glovebox light or a vanity mirror. Fitting thinner carpet is another example. But they always try to keep the RRPs relatively stable so they don’t adversely affect customer confidence and, ultimately, the resale value of vehicles. Did you know depreciation is the single biggest cost of car ownership after you’ve bought it? Luxury Car Tax, on the other hand, is something that needs to be dealt with, but, sadly, probably will be left alone. Even the Productivity Commission advised against it in its preliminary report into the car manufacturing industry. “Because it is levied on a narrow base, the LCT is a higher-cost and less efficient method of raising revenue than more broadly-based taxes,” the Productivity Commission report said. “The LCT is also arbitrary in its effect, in that it leads to taxpayers with the same economic means paying different amounts of tax depending on their taste.” Quoting the 2010 Henry Tax Review, the Productivity Commission helpfully added that LCT “falls on people with a preference for relatively expensive cars, but not on those with a preference for diamonds, fur coats or yachts”. For background, the LCT is 33 per cent of the price of a vehicle above $60,316, or above $75,375 on vehicles that use less than 7.0L/100km according to the Australian standard fuel rating label. The concession was introduced several years ago by the then Labor Government in an attempt to appeal to environmental interests. Instead, it favoured buyers of prestige cars. It is a further sign of how backwards this policy is when any government thinks 7.0L/100km is fuel-efficient; most popular German cars now comfortably dip below this, which is why Toyota is now the biggest contributor to LCT by virtue of all the LandCruisers it sells, among other gas-guzzlers. Understandably, Toyota and others have come out swinging against the LCT. In its submission to the Productivity Commission, Toyota said: “The luxury car tax is not a form of protection for local car makers. In fact the market share of locally built cars has dropped significantly since the LCT was introduced. Toyota supports the abolishment of the LCT as it is a punitive and inequitable tax paid by more Toyota customers than anyone else.” But the Coalition Government is unlikely to scrap a tax that brings in an estimated $450 million each year, especially when it has so many financial black holes to fill. Which means, for now, it would seem car prices aren’t likely to change one bit once the Australian car factories close -- unless the dollar reaches new, stratospheric heights. This reporter is on Twitter: @JoshuaDowling   Where your car comes from: percentage split of all imported cars in 2013 Japan 35 per cent (FTA planned) Thailand 22 per cent (FTA already in place) South Korea 13 per cent (FTA planned) United States 3.5 per cent (FTA already in place) Germany 7.5 per cent (no FTA planned but many cars attract LCT) United Kingdom 3.5 per cent (no FTA planned but many cars attract LCT) Other countries represent 15.5 per cent of imported vehicles, including Spain, Czech Republic, India, China, Mexico, Poland, South Africa, Mexico, Portugal, Belgium, France, Italy, Indonesia, Poland and others. Source: FCAI    

Rear-view cameras should have been compulsory on SUVs and utes long ago -- and any new model that doesn’t have them as standard rightly deserves to be ridiculed. Thanks in part to Australia’s highly suburbanised layout and our appetite for large vehicles, between 12 and 18 toddlers die on driveways each year. Hundreds more -- that don’t make the news -- get seriously injured. In a tragic twist, these high-riding vehicles that give us a commanding view of the road ahead also have much bigger blind spots directly in front and behind. Parking sensors are not enough to combat the problem, we need both sensors and cameras. The first family-SUV to have a rear-view camera as standard fitment across the range was the current model Toyota Kluger, introduced six years ago. That some SUVs are being released today with this feature either not available, or only available on the most expensive models, is absolutely unacceptable. For example, the Ford Territory and Holden Captiva SUVs still do not have rear-view cameras as standard fitment across their ranges. Sadly, they're not alone. Rear-view cameras are expensive to integrate into the design of a car if the company hasn’t included one in its plans from Day One (five years before it reaches showrooms). But you can fit aftermarket cameras (that show a small display in the rear-view mirror) to any car. They cost from $200 to $500. The next step has been "360-degree" view cameras which, thanks to camera trickery and clever placement, appear to give a birds-eye view of a car. But these are still only on expensive models and, for now, cannot be bought aftermarket. They must be designed into the vehicle. Studies show SUVs and utes are represented in between 70 and 80 per cent of driveway deaths and yet these vehicles account for only about one-third of cars on the road.  Cameras have only recently become available on some utes in recent years; they need to be on all of them. However, while we wait for authorities in Australia to make rear-view cameras a legal requirement, it is worth noting a few important points. The quality of the cameras varies greatly, particularly at night, and car makers are not immune to doing the bare minimum. For example, the rear-view camera on the new Honda CR-V is poor at night compared with the rear-view camera on the new Mazda CX-5. The other problem: a recent study found 40 per cent of driveway deaths were caused by the vehicle moving forwards, not backwards. So, what to do? Don’t move your vehicle unless you can eyeball all your kids, either inside or outside the car;  Move the vehicle slowly, turn the radio off and ask people inside the car to be quiet while you're manouvring in and out of the driveway so you can hear or feel anything untoward; Never solely rely on the rear-view camera or the mirrors. Always look over both shoulders. If in any doubt, get out of the car and do a walkaround. That 30 seconds could change your life, and/or someone else’s. There have been cases where people have driven over a neighbour’s child on shared or adjacent driveways. This reporter is on Twitter: @JoshuaDowling  

But workers and the rest of the industry will face a lengthy wait before the final call to shut Toyota’s Altona factory comes from head office in Japan. A formal decision from Toyota may not come until the middle of next year, even though it is as inevitable as Holden’s factory shutdown. The Federal Court’s decision to block Toyota from asking its factory workers to vote tomorrow (Friday) on changes to shift flexibility and overtime bonuses means that it is now highly likely that the company will not be able to meet its stringent cost-reduction targets that are key to securing investment in the 2018 Camry. It had been trying to slash $3800 from the cost of each car it builds, or about 15 per cent of the production cost. The changes to the workplace agreement -- as well as supplier cost reductions -- were key to Toyota Australia achieving its targets. But the lack of any adjustment to Toyota’s workplace agreement means the entire Australian car industry is likely to grind to a halt after Ford’s factory shutdowns in 2016, Holden’s closures in 2017 and a likely end to Toyota’s operations in 2018, when the current Camry ends its run. Toyota and the unions appeared in court twice today (Thursday) after the judge deemed in the first hearing that it was illegal for the company to seek an amendment to the current workplace agreement. According to the interpretation of the Federal Court, Toyota could not commence new negotiations until after the current workplace contract expires in March 2015. However, Toyota challenged this because in the second half of the wording of the regulation it says “unless there is worker consent”. Toyota had interpreted that asking workers to vote was a form of consent, and that if 50 per cent plus one worker voted yes to the changes, then they would be enforced. But even before today’s Federal Court decision, unions had foreshadowed a “no” vote so the result is likely the same. It is difficult to understand what Toyota workers and the unions disliked so much about the new deal. Holden workers had to agree to a three-year wage freeze; Toyota workers were still entitled to two pay rises next year (3.25 per cent in April and 2 per cent in September). A statement from Toyota said: “Action in the Federal Court has today resulted in Toyota Australia not being able to proceed with its planned employee vote on the proposed changes to its Workplace Agreement terms and conditions. “The move comes after four employees lodged a complaint with the Federal Court that Toyota Australia could not vary its agreement until it has expired in March 2015. “Justice Bromberg today supported the four employees and directed Toyota Australia to stop any action it was taking to vary the Workplace Agreement, including the employee vote scheduled for this Friday 13 December 2013." Toyota Australia President and CEO Max Yasuda said: “We believe that we are within our rights to vary our Workplace Agreement provided the majority of our employees support the changes through a formal vote. The company is doing everything that it can to secure the future for our employees and their families. “GM Holden’s planned closure in 2017 will put our manufacturing operations and the local supplier network under unprecedented pressure, so it is now more important than ever before that we make urgent changes. “A decision will be made next year on the next generation Camry and export program and we need to take urgent action if we want to stay at the negotiating table for future investments. “The proposed changes were designed to remove outdated and uncompetitive terms and conditions that make it difficult to compete with other Toyota plants throughout the world.” Toyota Australia said it may appeal the decision. But in reality, the Federal Court has given Toyota just the excuse it needs to shut its loss-making Camry factory. Here’s hoping Toyota factory workers are not put through the same misery and months of uncertainty endured by Holden factory workers. This reporter is on Twitter: @JoshuaDowling  

The move has come as as it became increasingly clear that it does not make financial sense for the company or the country. But did Holden and its factory workers deserve the public bollocking they’ve received from the Federal Government over the past week? Holden’s crime was to build a factory in what was once the semi-rural outskirts of Adelaide in 1963, that 50 years later would be suffocated by low-cost labour from our Asian neighbours. At its peak, Holden employed more than 20,000 workers across seven manufacturing facilities. Now there is just one car assembly line and 1760 workers. Policies from both sides of government over the past half a century have helped shape the economic headwind that Holden drove into: a wealthy nation with a strong currency, high wages and among the lowest import tariffs in the automotive world. Holden, against this stark backdrop, came to the government for assistance, just as it always has done, in much the same way farmers get a helping hand in times of drought. The difference, however, is that the future of Australian manufacturing remains bleak because the economic fundamentals are unlikely to change anytime soon. When Ford announced in May that it would close its Australian factories in 2016, Holden privately wondered why Ford didn’t even give the government the opportunity to help. It has since emerged that even doubling the government assistance to Ford would not have been enough to save it. But because Holden feels that its brand image is so closely linked to manufacturing -- even if most of the cars in Holden showrooms today come from South Korea and Thailand -- it decided to raise its hand, Oliver Twist-style, and utter "please, sir, can we have some more?". Given recent events, however, Holden is probably reconsidering that decision. The one good call the Federal Government has made in the middle of this Holden sledging campaign is to announce that it will buy bomb-proof BMWs for its politicians instead of hand-built Holdens that can barely withstand a hand-grenade. Holden was criticised for not pitching for the business. But Holden knows that the likes of Audi, BMW and Mercedes-Benz have specialist divisions that can deliver better equipped armoured cars for less money -- a fitting analogy for the rest of the car industry in fact. For example, the Cruze is the cheapest locally-made Holden in 20 years. But its sales have been dented by better equipped and cheaper cars from Japan -- buoyed by a currency that has been artificially devalued by the Japanese government. So where did it all go wrong for Holden? Holden should have cut its production costs sooner than it did (three months ago it got workers to agree to a three-year wage freeze if the new deal goes ahead). But Holden cannot be accused of not reacting quickly enough to the changing tastes of Australian car buyers. It got the Cruze small car into the Elizabeth factory and built it alongside the Commodore in less than two years, in the height of the Global Financial Crisis, when normally such efforts can take up to five years. No-one wants to take responsibility for Holden's manufacturing shutdown. In the end, Holden was in the wrong place at the wrong time.   Official statement from Holden As part of its ongoing actions to decisively address the performance of its global operations, General Motors today announced it would transition to a national sales company in Australia and New Zealand. The company also said it would discontinue vehicle and engine manufacturing and significantly reduce its engineering operations in Australia by the end of 2017. “We are completely dedicated to strengthening our global operations while meeting the needs of our customers,” said GM Chairman and CEO Dan Akerson. “The decision to end manufacturing in Australia reflects the perfect storm of negative influences the automotive industry faces in the country, including the sustained strength of the Australian dollar, high cost of production, small domestic market and arguably the most competitive and fragmented auto market in the world.” As a result of the company’s actions, approximately 2,900 positions will be impacted over the next four years. This will comprise 1,600 from the Elizabeth vehicle manufacturing plant and approximately 1,300 from Holden’s Victorian workforce. Holden will continue to have a significant presence in Australia beyond 2017, comprising a national sales company, a national parts distribution centre and a global design studio. GM Holden Chairman and Managing Director Mike Devereux said an important priority over the next four years would be to ensure the best possible transition for workers in South Australia and Victoria. “This has been a difficult decision given Holden’s long and proud history of building vehicles in Australia,” said Devereux. “We are dedicated to working with our teams, unions and the local communities, along with the federal and state governments, to support our people.” The sale and service of Holden vehicles will be unaffected by this announcement and will continue through the extensive network of Holden dealers across Australia and New Zealand. Warranty terms and spare parts availability will remain unchanged. “GM remains committed to the automotive industry in Australia and New Zealand. We recognize the need for change and understand the government’s point of view. Moving forward, our business model will change significantly however, GM Holden will remain an integral part of its communities and an important employer both directly and through our dealers,” Devereux said. Since 2001, the Australian dollar has risen from US$0.50 to as high as US$1.10 and from as low as 47 to as high as 79 on the Trade Weighted Index. The Australian automotive industry is heavily trade exposed. The appreciation of the currency alone means that at the Australian dollar’s peak, making things in Australia was 65 percent more expensive compared to just a decade earlier. With the decision to discontinue vehicle and engine manufacturing in Australia by the end of 2017, GM expects to record pre-tax charges of $400 million to $600 million in the fourth quarter of 2013. The charges would consist of approximately $300 million to $500 million for non-cash asset impairment charges including property, plant and equipment and approximately $100 million for cash payment of exit-related costs including certain employee severance related costs. Additional charges are expected to be incurred through 2017 for incremental future cash payments of employee severance once negotiations of the amount are completed with the employees’ union. The asset impairment charges will be considered special for EBIT-adjusted reporting purposes.   Holden milestones 1948 Prime Minister Ben Chifley unveils the first Holden car, declares “she’s a beauty”. More than 18,000 orders are held before the 48-215 “FX” Holden goes on sale. Some customers sell their place in the queue for £100. 1954 One in three cars on the road is a Holden. 1958 One in two cars on the road is a Holden. 1960 The first export of left-hand-drive Holden vehicles begins with a small shipment of cars to Hawaii. 1962 1 millionth Holden sold (EJ Special sedan, Oct 1962). 1964 Holden employee numbers peak at 23,914 across seven facilities in Queensland, NSW, Victoria and South Australia. 1969 2 millionth Holden sold (HK Kingswood, March 1969). 1974 3 millionth Holden sold (HQ Kingswood, June 1974). 1978 Holden celebrates 25 years of continuous sales leadership. 1981 4 millionth Holden sold (VC Commodore, June 1981). 1990 5 millionth Holden sold (VN Calais, August 1990, more than twice as many as any other Australian built car at the time). 1991 Japanese car-maker Toyota beats Holden and Ford to market leadership for the first time in Australia. 2001 6 millionth Holden sold (VX Commodore SS, June 2001). 2002 The last year Holden led the Australian new-car market. 2004 Holden produces 165,000 vehicles (the most in its modern era), almost matches the 1963 peak of 166,274. Factory worker numbers in 2004: 7350. 2005 Holden’s biggest export year: 60,518 cars were shipped, mostly to the US and the Middle East. 2008 7 millionth Holden sold (VE Commodore LPG, Aug 2008). 2011 After 15 years as Australia’s favourite car, Holden Commodore sales are overtaken by the Mazda3 from Japan. Automotive historians say it is the first time since WWI an imported car has led the new-car market. 2013 Toyota Corolla on track to become Australia’s top-selling car for the first time. Only five out of 100 new cars sold in Australia is a locally-made Holden. Holden is overtaken in some months by Mazda, Hyundai and Nissan. After several redundancies and a three-year wage freeze, Holden factory worker numbers fall to 1760. Despite a record new-car market, Australian vehicle production falls to its lowest levels since 1958. Holden is on track to export just 14,000 of the 84,000 cars it will make locally.

Contrary to earlier reports, the Holden decision does not need to go to the company's board, which meets monthly. Critically, this means a formal announcement regarding the fate of the Holden factory could happen at a moment's notice. An early announcement would alleviate the uncertainty being felt by the 1760 workers at the Holden factory and minimise the potential damage being done to the company's brand image. The blame game in the debate about Holden's future has come as a shock to even the most hardened industry observers. It is increasingly apparent the Productivity Commission process is a becoming a ruse given that the Federal Government has made it clear it will not review any future funding deals. Despite the hype, the situation Holden finds itself in is not solely the fault of the government, or Holden. Both are to blame. Successive governments from both sides of politics have created an economic environment that has led to a strong Australian dollar, high wages, and low import tariffs. Holden's sin has been to not address its production and labour costs sooner than it did. And to build a factory surrounded by countries with labour costs a quarter of Australia's. But you cannot accuse Holden of not reacting to the market. It got a small car into its Elizabeth factory alongside the Commodore in less than two years (instead of five), and in the middle of the Global Financial Crisis. There may be no doubt in the minds of executives at General Motors and Holden about the fate of the factory, now the company needs to do the right thing by its workers and make the call. Holden milestones 1948 Prime Minister Ben Chifley unveils the first Holden car, declares “she’s a beauty”. More than 18,000 orders are held before the 48-215 “FX” Holden goes on sale. Some customers sell their place in the queue for £100. 1954 One in three cars on the road is a Holden. 1958 One in two cars on the road is a Holden. 1960 The first export of left-hand-drive Holden vehicles begins with a small shipment of cars to Hawaii. 1962 1 millionth Holden sold (EJ Special sedan, Oct 1962). 1964 Holden employee numbers peak at 23,914 across seven facilities in Queensland, NSW, Victoria and South Australia. 1969 2 millionth Holden sold (HK Kingswood, March 1969). 1974 3 millionth Holden sold (HQ Kingswood, June 1974). 1978 Holden celebrates 25 years of continuous sales leadership. 1981 4 millionth Holden sold (VC Commodore, June 1981). 1990 5 millionth Holden sold (VN Calais, August 1990, more than twice as many as any other Australian built car at the time). 1991 Japanese car-maker Toyota beats Holden and Ford to market leadership for the first time in Australia. 2001 6 millionth Holden sold (VX Commodore SS, June 2001). 2002 The last year Holden led the Australian new-car market. 2004 Holden produces 165,000 vehicles (the most in its modern era), almost matches the 1963 peak of 166,274. Factory worker numbers in 2004: 7350. 2005 Holden’s biggest export year: 60,518 cars were shipped, mostly to the US and the Middle East. 2008 7 millionth Holden sold (VE Commodore LPG, Aug 2008). 2011 After 15 years as Australia’s favourite car, Holden Commodore sales are overtaken by the Mazda3 from Japan. Automotive historians say it is the first time since WWI an imported car has led the new-car market. 2013 Toyota Corolla on track to become Australia’s top-selling car for the first time. Only five out of 100 new cars sold in Australia is a locally-made Holden. Holden is overtaken in some months by Mazda, Hyundai and Nissan. After several redundancies and a three-year wage freeze, Holden factory worker numbers fall to 1760. Despite a record new-car market, Australian vehicle production falls to its lowest levels since 1958. Holden is on track to export just 14,000 of the 84,000 cars it will make locally. This reporter is on Twitter: @JoshuaDowling   _______________________________________  

The Australian car manufacturing industry is officially on death row — and governments know it but are continuing with their facade to try and save it. A top secret document – leaked to the Adelaide Advertiser – prepared independently for the SA Government using information supplied by Holden has found “our key working assumption is that manufacturing/assembly of mass-market vehicle platforms at GMH (General Motors-Holden) is not sustainable". The briefing prepared by University of Adelaide Professor Goran Roos has revealed “it is therefore likely that vehicle assembly will eventually cease: 2016 being the earliest likely date". The report also explores the possibility of a Holden factory shutdown in 2018 and 2022, but these scenarios are much less likely. A 2016 end date would put Holden’s Elizabeth factory shutdown in South Australia in the same year as Ford’s factory closures in Broadmeadows and Geelong in Victoria. If Holden goes, well-placed Toyota insiders say the Japanese maker will almost certainly follow in 2017 — the end of the current Camry model cycle. Toyota’s Altona factory near Melbourne is facing the same highly optimistic cost reduction targets of $3800 per vehicle or $400 million per year. "If Holden were to close, then the (parts) supply chain would start to fail and this, in turn, may well lead to Toyota ceasing Australian operations," the report said. "Only 30 per cent of Tier 1 suppliers would survive the closure of GMH and Toyota." The "cabinet in confidence" document also confirms every Holden fan’s worst nightmare. In the unlikely scenario that the new generation Holden cars get built from 2016 onwards, the large sedan that replaces the Commodore will be front-wheel-drive. In a stunning revelation, the report says that Holden will not have a rear-wheel-drive car in its line-up — which also rules out a V8 for the first time since 1968 — and it does not yet have a contingency. "The true impact of not retaining this offering is not clear. However GMH is likely to experience some sales erosion sand migration to other brands," the report said. When the Falcon and its performance models bow out in 2016, Ford will import the Mustang coupe from the US to appeal to the enthusiast market. "The next gen model mix also excludes the ute variant," the government report said, confirming a News Corp Australia exclusive from a fortnight ago. The briefing paper reveals that Holden’s future manufacturing plans are a basket case that will lose the company money, even with an increase in taxpayer support. It says Holden’s sales forecast of its front-wheel-drive car "err towards the optimistic". Meanwhile the assumption of a sales increase for Holden’s next generation small car — the most competitive segment of the market — "have a greater downside risk than upside". Both of these assessments shoot holes in Holden’s case for an increase in taxpayer funding, as does Holden’s internal forecast of a financial loss over the life of the two new models. "Of concern is the fact that the current Commodore … is profitable, whilst the Cruze platform is unprofitable," the report said. "In simple terms (Holden) has chosen to drop a profitable platform and replace it with further platforms that have so far proven to be uncompetitive." The report believes Holden’s manufacturing cost reduction targets "are aggressive and there is no specific plan in place to achieve these targets". The local content of Holden’s future models — if they were to be built — is also likely to be severely impacted. "In many cases, global suppliers have been locked in for global platform contracts," the report says. "For an Australian-based supplier to gain global share it would have to dislocate a current global competitor. "Even if an Australian based supplier could offer a cheaper alternative for (Holden) locally it would not be adopted as it could interfere with the broader global GM supplier relations." Holden is also exploring the "unusual option" of extending the life of the current Commodore until 2018. But this scenario is unlikely unless Holden goes ahead with the new models that will keep the factory running from 2016 to 2022. All of the above makes for grim reading for Holden and Toyota workers and their colleagues in the parts supply industry. But it is the reality. Given that this is a government report, I’d really like to know why State and Federal politicians have been continuing their facade to try and save the car manufacturing industry, when they know it’s doomed. Next time a politician makes a pledge to bring the car industry back from the brink, remember they’ve read the same poignant facts you just have. It may as well be dead air. This reporter is on Twitter: @JoshuaDowling  

Imagine what executives in Detroit and Tokyo have made of all the fuss, as all sides of politics lob grenades at each other and unnamed sources in Canberra background the media with their hidden agend

No-one in the industry is prepared to say it publicly yet but the departure of Holden's biggest advocate -- the company's outspoken boss Mike Devereux -- almost certainly means the factory will close. That may sound like a giant leap but let's go through the facts. Holden has said repeatedly and on the record that it loses money on every locally-made car it sells -- and that it would be more profitable if it switched to an import-only business, as Ford will do from 2016. The Federal Government's future export demands of Holden are unrealistic, unworkable and would make Holden even more unprofitable. The production line labour costs at Holden are fives times higher than they are in Thailand, now our second biggest source of motor vehicles thanks to a Free Trade Agreement signed, incidentally, by the Howard Coalition Government in 2005. The patience of the current Abbott Coalition Government is already wearing thin in regards to the continued handouts to the car industry. And they've only been in office 50 days. At least two of the four bosses of Holden before Mr Devereux would almost certainly have let Holden die on the vine. In my first ride-along with the the 2007-2008 boss of Holden, Briton Chris Gubbey, he said glibly that "most of the low lying fruit has been picked". It was obvious to me he was looking to shut the joint down. It's a little known fact but Holden almost died in late 2008 and early 2009 in the grip of the Global Financial Crisis. We didn't know about it because Holden wasn't as open then as it is now. The boss of Holden at that time, Mark Reuss, fought against the odds to save it. He now runs GM North America and was instrumental in getting the Commodore to return stateside and have the Caprice sold as a police car there. But those modest export sales are not enough to prop up Holden. Sadly it seems there is little Mr Reuss or anyone else can do to save Holden from here on in. When Mr Devereux took the Holden job in 2010 he was asked if he was sent here to shut it down. He said he'd rather not answer that question yet. But Mr Devereux soon fell in love with the joint and genuinely -- against all economic realities -- fought loudly to save Holden's manufacturing operations. Once again it's Holden's turn to face the cold hard realities of "making things" in Australia. It just doesn't add up without substantial government assistance. A new Holden boss will give GM a neat way to reset the tone of government discussions, if there are any more worth having. For its part Holden says it is still committed to Australia - but the company was a lot less emphatic about it after Mr Devereux's job announcement late Friday (when most bad news gets delivered, in an attempt to miss the news cycle). Now we wait for General Motors to appoint a new Holden boss in the next month or so. It will almost certainly be a foreigner. The last Australian to run Holden was John Bagshaw from 1987 to 1990. The new boss will ultimately decide the fate of the Elizabeth car-making factory - if it hasn't been made already.   This reporter is on Twitter: @JoshuaDowling  

Well, that didn't take long, even in political terms.  After just three weeks as the Abbott Government's Federal Industry Minister, Ian Macfarlane has made a rapid retreat from several of his key demands of Holden in his early days in office. After initially claiming any future deal would be: "'The End', in capital letters, in black, six feet high, 'This is all we're ever going to give you'," Mr Macfarlane revealed he was trying to come up with a "blood transfusion" to keep Holden going until June 30. Money that Holden hasn't asked for -- and doesn't need. Holden -- and the rest of the car industry for that matter -- is after continued support beyond 2016. Then after a tour of the Toyota's factory in Altona in the middle of this week Mr Macfarlane backed away from his export demands of Holden, admitting "I don't know what's unrealistic and what's not", when asked if he had set the bar too high (he had, by asking Holden to almost double exports to 30 per cent of local production). We now know, thanks to a leak from senior government sources, that Mr Macfarlane's export demand was one of the first issues Holden hit on the head during his two-hour closed-door meeting with the car maker last week. For background, exports aren't viable because (a) our dollar and our labour costs are too high, and (b) even if our dollar weakens, the "global" cars that Holden will build in Australia from 2016 onwards can be built elsewhere far more cheaply, thereby eliminating export destinations. You can now start to see why Holden and the Federal Government are backed into a corner. Holden can't survive on domestic car sales alone because decades of tariff reductions and Free Trade Agreements have opened the door to a flood of cheap imports. The top-selling car, the Mazda3, has led the market for the past two years on about 44,000 sales -- less than half what the Holden Commodore sold at its peak. So, the burning questions remain: does Australia want to keep building cars -- and keep 40,000 jobs for manufacturing workers, many of whom would likely end up on unemployment benefits, based on previous industry shutdowns? Can Australia afford to keep the car industry? Can Australia afford to lose it? SA Premier Jay Weatherill believes the Productivity Commission will recommend taxpayer dollars be spent elsewhere. Despite Mr Macfarlane's passion for the industry (he brought a cap signed by the late racing legend Peter Brock to the Holden factory tour) and vocal support for the workers (he says he still knows how to weld, from his time as a farmer), there was one more clue this week that Holden's drama is far from over. He said the government will "assess through the Productivity Commission whether or not we can make the industry viable. I will do everything I can … but in the end it's a decision of the Government," Mr Macfarlane said in the media scrum after his Toyota visit. Translated, that means the real decision-makers on Holden will be Prime Minister Tony Abbott and Treasurer Joe Hockey. Mr Hockey's views on wanting the industry to stand on its own are widely known. Despite the rhetoric from Prime Minister Abbott, the industry believes he could be swayed either way. Predicting the outcome of this decision is like picking the winner of the Melbourne Cup a year out. What will likely weigh most on Mr Abbott's mind, however, is not whether the industry is viable, or if he wants to save 40,000 jobs, but if he wants the death of Holden on his watch. If the Holden factory closes, by genuine coincidence of vehicle production cycles, it will shut about the same time as Mr Abbott will head to the polls for re-election for the first time. This reporter is on Twitter: @JoshuaDowling