It seems like an eternity ago that General Motors executives from Detroit shocked Australia by announcing the Holden brand would be axed on the last day of 2020. Now that day has come.
The announcement in February 2020 that Holden was pulling out of Australia altogether – less than three years after closing its local factories and amid its weakest sales in more than 60 years – came moments before the world was gripped by the coronavirus crisis.
About half of Holden’s national dealer network have already taken down their signs, closed showrooms, or installed new brands in their place. A number will continue as service and parts agents.
All dealers, however, have been instructed to report all remaining new Holden cars in stock as sold by the end of today, otherwise they will miss out on the massive discount bonuses offered since February.
Today, 31 December 2020, marks the end of an era for Holden, which started as a saddlery in Adelaide in 1856 before graduating to horse-drawn carriages and coaches – and then car bodies – in the early 1900s.
In the 1920s the Holden company was appointed to locally assemble Chevrolet, Cadillac and Buick cars for General Motors, from parts imported from the USA.
Over time the relationship grew until, eventually, General Motors bought Holden. After World War II, the car giant started working on its first Australian vehicle, the 48-215 (or FX) that would be sold under the Holden badge.
In November 1948, then Prime Minister Ben Chifley declared “she’s a beauty” as the first Holden rolled off the production line. The Port Melbourne building in the background of the photos still stands today, but now all it holds are memories.
From its earliest days, Holden’s decades of success were tied to government support – in the form of hefty import tariffs to protect local manufacturing, tax breaks, or taxpayer funded support.
In the post-war era, government support was needed to boost jobs and get Australia on its feet. It’s one of the reasons Holden is such a part of Australian culture, and had become a fabric of our society.
Over time, however, successive Australian governments – from both sides of politics – grew tired of the money required to keep the shrinking car industry afloat.
With Australia surrounded by countries with low-cost car production and cheap wages, it sadly was only a matter of time before someone locked the gates on the local industry.
To be clear, high wages paid to skilled manufacturing workers in Australia is not the cause of the local car industry’s shutdown. Australia’s cost of living is high and has been increasing for decades. It’s only fair factory workers get a fair day’s pay for a hard day’s work.
In reality, there were several contributing factors. Australian production costs – wages, energy, materials, transport – were roughly five times more than the same costs in nearby countries that were trying to build an auto industry.
Another factor: our local car-buying tastes had become fragmented, so it was hard for car companies to pick a winner and manufacture it locally. And even if it did pick the right model, that would not be enough.
When the homegrown Holden Commodore and Ford Falcon were market leaders, their factories produced close to or in excess of 100,000 cars per year. Today, you can lead the Australian car market with a model that sells just 50,000 a year. And that’s not enough to sustain the output of a local factory.
So the only way local car factories could remain viable in Detroit’s eyes was with government assistance, to make up for the shortfall in revenue. In other words, to make up for the financial losses of running a car factory in Australia.
It’s worth noting at this point, most if not all countries with auto manufacturing have government incentives or taxpayer assistance, at national, state and local government level, as well as carefully designed tariffs on imports. Australia had become an open market except for the remaining 5 per cent import tariff with Europe and the UK.
So the proposition from the car industry to the Australian government was effectively this: What’s cheaper? Taxpayer funded support for local car manufacturing, or the cost of unemployment benefits for the 50,000 or so workers who would be out of jobs across the entire industry? (In the end about half of the blue collar workforce found new jobs, while the other half either retired, went to part time work, or became unemployed).
It was a question no-one answered directly, but soon there was a clue. The Federal Government had decided enough was enough, and that the car industry wasn’t worth the billions of taxpayer dollars it was requesting, to continue manufacturing here for another decade or so.
Speculation over the fate of Holden’s car assembly line in Adelaide had grown after Ford announced in May 2013 it would shut its Broadmeadows and Geelong production facilities in 2016.
In December 2013, then Federal Treasurer Joe Hockey (pictured above) demanded in parliament that Holden “come clean” and decide whether it wanted to remain in Australia as a manufacturer.
The shockwaves made it all the way to Detroit. Less than two weeks after being blasted in Federal Parliament, Holden announced in mid December 2013 that it would close its local manufacturing operations in 2017, about a year after Ford.
With a crumbling parts supply base in the wake of the Ford and Holden factory closures, Toyota soon followed with its Altona factory shutdown announcement, though it would end operations in 2017 just a week or so before Holden, leaving General Motors as the last to turn out the lights.
Although car companies compete with each other in showrooms, all three remaining local manufacturers at the time – Ford, Holden and Toyota (which made the Camry here in one of seven factories around the world that built the same model) – relied on and shared the same local parts supplier base.
Not all parts were identical, of course, but components that made sense – or were hidden from the customer’s view – were shared.
For example, the seat rails (hidden under the seat cushion) used in all three locally made sedans were identical at one point. Wheel suppliers were once common, too, though they used different designs.
The parts supply base of more than 200 local companies needed the output of the three remaining car manufacturers to be viable. Once one car factory closed – Ford – the shutdowns of Holden and Toyota assembly lines were inevitable. That’s why local car manufacturing slammed the brakes so quickly after the Ford factory shut.
So, car manufacturing in Australia is now all but a distant memory. But why did Holden as an entire brand die, barely three years after its factory closure?
Toyota is one of the world’s biggest and richest car companies, and it has the most diverse model line-up of any brand sold locally. So it was easy for Toyota to pivot to other models to fill the void of local manufacturing. Toyota Australia has arguably prospered since closing its loss-making Camry factory in Altona in late 2017.
Ford has survived on the success of the locally-designed and engineered Ford Ranger (built in Thailand, South Africa, Argentina and the USA). The Ford Ranger ute and Everest SUV account for three out of every four new Fords sold in Australia. Had those models not been as successful – and as profitable – as they are, Ford could have faced the same fate as Holden.
However, Ford has one advantage: it is still huge in the UK, one of the world’s biggest right-hand-drive markets. And so Ford has a good chance of getting access to future right-hand-drive models out of Europe – if the numbers add up.
For now, Ford is safe. But Ford knows it needs to have less reliance on the Ranger in Australia, for the long term health of its operations here.
Which brings us to Holden. In the end, Holden was a grab bag of whatever models it could source from various General Motors factories around the world. At least, that’s how some Holden dealers and nervous company insiders saw it.
The Holden Colorado ute (which had become Holden’s biggest selling model after the local factory shutdown) and the Holden Trailblazer 4WD came from Thailand, the Holden Trax and Captiva SUVs and the Barina hatch came from South Korea, the Holden Astra came from the UK, the final (imported) Commodore came from Germany.
At the time, General Motors executives told Holden dealers this smorgasbord of cars was a sign “the cavalry is coming”.
There were glimpses of hope. Former Holden boss Mark Reuss, who was now in charge of global product development for General Motors, based in Detroit, made sure Holden wasn’t forgotten. At some considerable engineering expense, Reuss was instrumental in developing right-hand-drive versions of what would become the Holden Equinox and Holden Acadia (pictured below), two models designed to cash-in on the SUV boom.
At the time, Holden had one of the oldest showroom line-ups in the industry and there were no promising new models on the horizon. But these two models – the Equinox and Acadia – were, apparently, just the start.
Indeed, in August 2018, former Toyota Australia boss Dave Butter (pictured below) was lured out of retirement to run Holden with a promise from Detroit, as one insider tells it: “Don’t worry, Dave, we’ve got new right-hand-drive cars coming for you”.
Mr Buttner was clearly buoyed by what he saw, and in media interviews dismissed suggestions he was hired to close Holden. In one of his many denials, Mr Butter told media: “I did not join the company to close Holden. We’re not for sale, I didn’t come to sell the company down, I came out of retirement to work with people to rebuild this fantastic brand.”
However, something changed between August 2018 and late 2019. No-one will say so on the record, but the best we can piece together is that the promised new vehicles from Detroit slowly started to disappear from future model plans in early 2019.
Holden’s new top-seller, the Colorado ute, was supposed to be a complete redesign from the tyres up for the next model, and more closely based on the US version of the Colorado.
Already long overdue for an update, the Colorado replacement kept getting pushed back. And back. And back. It then went from an all-new model to simply a “new top hat”, industry jargon for a new body on old underpinnings. It’s a cheap way to develop a new vehicle, as it cuts engineering costs by about two-thirds.
Some Holden insiders started to get worried. The next Colorado needed to be a home run – so that it could help fund the development of other models in Holden’s future range.
Other executives inside the company figured the writing was on the wall once General Motors sold Opel in 2017 – about the same time as the Adelaide factory closure, by an unfortunate coincidence – which would eventually bring Astra and Commodore to an end (those models were sourced from Opel and, eventually, those supply agreements would expire).
However, General Motors executives in Detroit were insisting there was nothing for Holden and its dealers to worry about because GM had other models coming. But those long promised new models never did turn up.
With the benefit of hindsight, there was another big clue we all missed – and it even blindsided those inside Holden.
On November 26, 2018, General Motors in Detroit announced five factories in North America – and two unspecified assembly lines overseas – would not be assigned new vehicles or components after 2019.
Those two overseas factories turned out to be the last two assembly lines General Motors had in right-hand-drive countries: India and Thailand. GM was making a hasty retreat from right-hand-drive markets globally, but it managed to keep those plans top secret for another year.
General Motors could see Holden’s sharp sales decline from Detroit – it had run out patience and wasn’t about to invest more money. The billions of dollars required to give Holden a lifeline could – and probably did – instead go towards the development of higher profit models such as GM’s US pick-ups, or more globally-important models, such as its new range of future electric cars.
Even Holden executives – except perhaps for those at the very top – didn’t find out about Holden’s demise until it was too late.
The sale of the Thailand factory – the source of the Colorado, Holden’s biggest selling model – was confirmed within hours of the 17 February 2020 announcement that Holden would be axed by the end of the year.
Mr Buttner had stood down from Holden suddenly in November 2019 – just three months before the Holden closure announcement – and after just 16 months in the job.
It was one of the shortest tenures in the company’s 71-year history, and came after Holden posted its lowest sales since 1956.
Mr Buttner was only the second Australian boss to run Holden after it had been led for 25 years by foreign executives. Mr Buttner had vowed to turn Holden around, but he never got the chance.
Having had to oversee the closure of the Toyota Camry factory in Altona in October 2017, the industry speculation is that Mr Buttner didn’t want to have Holden’s closure on his bio as well – so he made an early exit, in November 2019.
In the process, Mr Buttner avoided having to announce the demise of the Commodore nameplate (December 2019) and the end of Holden (February 2020).
While Mr Buttner has never said he was informed of the impending closure of the Holden brand, the industry veteran knew how to read the signs, and the signs weren’t good.
Despite his best efforts to bring rigour to Holden after conducting a long overdue restructure, it turns out the damage had already been done.
It has been written before, but having had the better part of this year to reflect on the demise of this once proud brand – and after interviewing countless Holden insiders and dealers – a large portion of the blame for Holden’s decline in just two and a half years can be sheeted back to the company’s poor marketing decisions in the wake of the factory closure in 2017.
Holden tried to reinvent itself as a new-age brand, even though it had showrooms full of old models.
Instead of using straight-talk in its advertisements to Australian new-car buyers, Holden embarked on a truly bizarre series of TV ads, including one campaign that glorified a bunch of art thieves in a mock car chase, another with a chef making spring rolls, and a billboard campaign that dared people to buy a Holden if they had “nothing to prove”.
Although some of the ads won accolades for artistic flair, if new-car sales charts are the scoreboard, none of the ads hit the mark – nor did they tell consumers anything about the vehicles.
Holden, the company that had built its reputation on “football, meat pies, kangaroos and Holden cars” was suddenly trying to go metro or hipster, or a bit of both. It was an own goal. Traditional buyers were turned off by this new contrived Holden image, and would-be buyers saw Holden as being try-hards or, at the very least, insincere.
As one dealer put it: “We were at the stage where we just needed to sell some bloody cars, and what Holden did was put up a bunch of TV ads that meant nothing to anybody. They needed to simply say: ‘Here is the car, this is how much it costs, here are the features it has that the others don’t’. At least that way we might have got some people in the door.”
At the height of its powers in the mid-to-late 1960s, Holden had 50 per cent market share: More than one in every two new cars sold in Australia was a Holden.
However, over time and as the Australian car industry grew, market share dipped to a still respectable 20 per cent (one in five new cars sold). A position of market strength which, incidentally, Toyota now enjoys.
Once the Holden factory closure was announced, it was like someone pulled a plug. Confidential “intention to buy” surveys showed Holden was disappearing from the shopping lists of prospective buyers.
When Holden’s intention to buy score shrunk to 8 per cent, Holden executives were clearly worried. When the score eventually shrunk to 4 per cent, there was disbelief – but the data turned out to be true.
In the end, fewer Australians wanted to buy a new Holden than at any other time in its history.
Holden’s ageing model line-up didn’t help. But having wrapped itself in the Australian flag for more than 70 years, Holden suddenly stood for nothing. And buyers could sense it a mile off.
Had Holden hit the panic button, used straight-talking ads, and got its volumes up to a viable level a little sooner, it might not have ended this way.
The Holden Colorado ute, Equinox SUV and Acadia seven-seat SUV weren’t the best in their respective classes, but they were honest cars at honest prices. What a pity Holden didn’t tell anyone that.
Had Holden sold more cars by spruiking the virtues of each vehicle – rather than embarking on warm and fuzzy image-changing “lifestyle” marketing – it could have bought enough time to get to the next round of new generation vehicles.
Instead, Holden’s marketing messages appeared to have the opposite affect, and drove people away in record numbers.
Rest in peace, Holden. Sorry it had to end this way.
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