The boss of Holden says its Chevrolet Caprice police car export program to the US is “very much alive”, although he admits it is likely to miss sales targets by a considerable margin for the foreseeable future.
GM Holden chairman and managing director Mike Devereux made the announcement after earlier confirming Holden’s decision to cut more than 100 casual and temporary workers from its South Australian vehicle assembly plant.
Devereux told Australia’s motoring media the economic pressure created by the high Australian dollar meant it would not meet its export targets this year, but he insisted the Caprice Police Patrol Vehicle program was not dead.
“The police car program is very much alive and we will sell thousands of police cars,” Devereux said.
“We are putting police cars on boats … every month. The police car program is alive and well, I just wish we were selling more of them.”
Devereux said Holden initially hoped to ship as many as 17,500 Chevrolet Caprice Police Pursuit Vehicles to the US per year in the long term, as well as planning to sell more than 4000 Chevrolet Caprices to the Middle East this year, but conceded neither would eventuate under the current economic conditions.
“With the [Australian] dollar at $1.07, we’re not seeing the kind of export growth that we were anticipating.
“We’re going to sell thousands of police cars [to the US], but I would have liked to have been in the five-figure range and above. Given the police car market in the US is 70,000 units a year, I would have liked to take 20 per cent of that, maybe even 25 per cent of that.”
Devereux said Holden estimated the Australian dollar would remain around parity with the US dollar for “at least the next year or two”. He admitted it would be near impossible to exceed 10,000 Caprice police car sales over that time, but said cutting prices of export vehicles was not an option.
“I have to live in the real world on this and, at $1.07, five-figure sales of those cars is going to be pretty tough.
“What we can’t do is just discount the car and lose money. That’s not a smart business decision.”
Despite a drop-off of exports, Devereux said he was optimistic about the domestic side of the business for 2012.
He confirmed reports that the Cruze small car had become the brand’s top-selling car for the first time ever in January, assuming third position on the national sales table ahead of the Commodore, which is expected to finish fourth.
He admitted the balance of production at the Holden Vehicle Operations plant in Elizabeth, South Australia, would continue to shift towards the Cruze in the future – effectively confirming that Holden expects Commodore production and sales to continue to decline.
“You’re going to see gradually over time Cruze will go from strength to strength and probably take an ever-increasing portion of our plant.
Devereux said he would watch with interest the market’s reaction to the four-cylinder Ford Falcon EcoBoost, which goes on sale in April, but said Holden had no plans to follow with a four-cylinder Commodore of its own.
“I’m pretty happy with what we have in this plant. We’ve got a great four-cylinder Cruze line-up and we’ve got a great V6 and V8 commodore line-up, and that’s the way it’s going to be.”
Sales of the Cruze increased more than 19 per cent last year while Commodore sales fell almost 12 per cent as the market continues to abandon larger cars in favour of smaller ones. But Devereux said it upset him when he heard people say Australian companies did not make the cars Australians wanted to buy.
“I think we do. We make two of the top five cars in the country in the same damn plant, so I get frustrated when I hear that we should be making what people want to buy, because, in fact, we are.”
Devereux admitted if Holden was to continue making two of the top five cars it was crucial that it struck a significant co-investment deal with state and federal governments to attract capital from its Detroit-based parent company.
“And not just a little capital, but hundreds and hundreds of millions of dollars of investment, and that’s what the current negotiations with the government are all about.
“I would say in the next 30 to 60 days we’ll have some announcements to make in that regard that are very important for the long term future of the manufacturing base in the country.”