Holden close to new investment in Cruze/Commodore

Australia’s Minister for Manufacturing, Kim Carr, and South Australian Premier Jay Weatherill have been in talks with GM at this week’s 2012 Detroit motor show as part of a political delegation seeking future support for the Australian car industry.

Carr joined senior Ford Motor Company executives yesterday in announcing a new $103 million co-investment program that would be used for 2014 updates to the Falcon and Territory to keep the locally built large car and SUV going until at least the end of 2016.

Holden wasn’t able to announce its own confirmed co-investment strategy but the car maker’s managing director, Mike Devereux, says parties are working towards an agreement.

“The discussions with the Minister and the Premier have been very positive and productive,” says Devereux. “We’re making good progress in developing a new co-investment plan to help secure a long-term future for Holden and the automotive and manufacturing industry more broadly.

“In the meetings Minister Carr and Premier Weatherill demonstrated the clear commitment of the Australian car industry and our strong mutual desire to retain the capabilities we have in design, engineering and manufacturing.

“Car makers are investing billions of dollars to develop future vehicles, so it’s critical for Australia to have consistent and competitive long-term policies that make this country an attractive place for General Motors and other companies to continue to invest.”

Holden is reported to be seeking about $200 million from the government to ensure production of next-generation models of the Cruze small car and Commodore large car currently assembled in GM Holden’s Elizabeth plant in Adelaide.

South Australian Premier Jay Weatherill admitted to ABC News radio after the meetings that closure of GM’s Australian operations was one of the options being considered by the world’s biggest car maker.

“It’s a possible scenario [closing Holden manufacturing] and of course we’re doing everything we can to resist that,” said the Premier.

“But the truth is that car making is a global industry, so the future for Holden in South Australia and importantly the components suppliers in South Australia will involve us making sure that we’ve got a secure place in that global industry.

Weatherill says the state and federal governments are not prepared to commit taxpayers’ money for just a short-term solution and is seeking a longer-term commitment from GM to Australian car manufacturing.

“I think [GM is] committed to working with us to securing Holden’s future in Australia, and in particular the Elizabeth plant, but it will be contingent upon us reaching an agreement,” Weatherill told ABC News radio.

“Part of that agreement will involve both the Commonwealth and state governments making a substantial co-investment in the future of the Elizabeth plant.

“We are prepared to make a co-investment to make sure that Holden stays here, but we don’t want it to be just a rescue package. We want it to be something that’s going to sustain [Holden] into the future.”

Minister Carr (pictured above) admits the Australian car industry is facing difficult times with the high Australian dollar and rapidly declining large-car market.

Sales of the Holden Commodore and especially the Ford Falcon have dropped alarmingly in recent years.

The Commodore’s 15-year run as Australia’s best-selling vehicle was ended in 2011 by the Mazda3 small car, while the Falcon plummeted by 36.5 per cent year on year to its worst sales result on record – to fewer than 19,000 units.

Holden and Ford have both received recent investments from the government through its $3.4 billion, 10-year Automotive Transformation Scheme that runs to 2020 – specifically the now-defunct Green Car Innovation Fund that saw the government provide $1 for every $3 invested by the local car makers in more efficient vehicles.

The GCIF contributed $42m towards Ford’s $232 investment in a four-cylinder Falcon variant due this April and a turbo diesel Territory launched in 2011.

Holden received $149m from the GCIF and $30m from the South Australian state government to put towards local production of the Cruze small car.

Australia’s other local car maker, Toyota, has also received money from the Fund, with $35m awarded in 2008 for the local production of the Hybrid Camry.