Holden Commodore, Cruze sales dip forces plant closures

Holden will stop production at its Elizabeth assembly plant in South Australia for a number of days between now and the end of the year as it reacts to low demand for its Holden Commodore and Holden Cruze vehicles.
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Between July and August, sales of the Commodore are down 33.2 per cent compared with the same period in 2011, while the Cruze has also dipped 29.2 per cent over the same period.

Holden corporate affairs manager Sean Poppitt explained the company would hold a “small number” of “market response days” in the coming months to avoid creating an oversupply of cars.

“They’re individual days that are spread out between now and the end of the year,” Poppitt said. “We’ve got a small number of those, which is designed to basically align production with demand.

“It’s really crucial for a niche, low-volume plant like our one that we’re able to respond to market fluctuations.”

Although the Australian new-vehicle market is up 9.4 per cent so far this year and is on track to break the all-time record high, Poppitt said there were still a number of challenges for individual brands, particularly local manufacturers.

“You can look at any number of VFACTS [industry sales] reports and see that it’s a hugely competitive marketplace out there and it’s just crucial that we’re able to respond,” he said.

Poppitt said the down days would only trim Holden’s projected annual production by four per cent, or roughly 2500 to 3000 vehicles.

He said the company was not in a position to talk about the precise number of days or hours of production that would be lost, but admitted the bulk of the plant’s 2300-strong workforce would not be in the plant on those days.

Workers will be on 60 per cent pay for the down days but will be able to top that up to 100 per cent by taking long-service leave or using other outstanding entitlements.

Poppitt said the market response days were part of the employee’s enterprise bargaining agreement and Holden worked closely with senior union representatives to identify the best days to stop production.

He said the vast majority of the workforce was very understanding of the situation.

Holden will also stop vehicle production next week as it completes major engineering and facility upgrades to its Elizabeth plant in preparation for building the next-generation VF Commodore, which goes on sale in the first half of 2013.

Next week’s closedown period has been part of Holden’s schedule since 2011.

Sales of Holden’s large sedan and wagon are down 26.8 per cent so far this year, putting Australia’s favourite car for 15 consecutive years between 1996 and 2010 on track for its lowest yearly sales result in decades.

The compact Cruze is also down 7.7 per cent despite its small-car segment growing by 2.6 per cent so far in 2012.

Holden’s other locally manufactured models are also feeling the pinch, with the luxury Caprice down 11.5 per cent and the Commodore-based Ute down 19.4 per cent.

Holden announced a $275 million co-investment package with the government in March securing its local manufacturing operations until at least 2022. The deal came just weeks after the manufacturer stood down around 140 employees and cut its daily production from 450 to 400 vehicles per day.

Fellow Australian manufacturer Ford, closed its Victorian facilities for around a week in July as it too sought to match production with diminishing demand for its vehicles, particularly the large Falcon sedan.