The Death of Holden PDF

Preview

Summary

Case study on the fall of holden...

Description

The Death of Holden

Holden, formerly known as General Motors-Holden is an Australian business and former automobile manufacturer which imports manufactured cars under the Holden brand. It was headquartered in port Melbourne and founded in 1856 as a saddlery manufacturer in South Australia. Australia’s PMV industry was dominated by Holden during the 1950’s due to GM’s heavy investment into production capacity to meet post war demand. However, despite their success in the 1950’s, foreign competitors in the market started to gain traction in the 200’s. In Australia, Holden’s market share started to decline from 27.5% in 2000 to 15.2% in 2006. This decline led to Toyota overtaking Holden as the number 1 seller in Australia. The overall turndown affected Holden’s profits; the company recorded a combined gain of A$842.9 million from 2002 to 2004, and a combined loss of A$290million from 2005 to 2006. One of the main factors that impacted not only Holden but the entire manufacturing industry was the rapid appreciation of the Australian dollar due to the mining investment boom and the cost of reducing the workforce, including the loss of 1400 jobs after the closure of the third-shift assembly line in 2005. Holden started to gain some traction again and fare better in 2007 as they posted only a A$6M loss. This was followed by an A$70.2 million loss in 2008, an A$210.6 million loss in 2009 and a profit of A$112 million in 2010. The volatility in their profits continued to worsen, with each year returning vastly different numbers. In March 2012, Holden was given a $270 million subsidy by the Australian, South Australian and Victorian governments in hopes of keeping the manufacturing industry in Australia alive. In return, Holden planned to inject over $1 billion into the PMV industry in Australia. They estimated the new investment package would return around $4 billion into the Aus economy and see GM Holden continue making its cars in Australia to at least 2022. However, their inability to secure the extra funding required from the coalition government in December 2013, General Motors announced that Holden would cease engine and vehicle manufacturing operations in Australia by the end of 2017. As a result, 2900 jobs would be lost over four years. And beyond 2017, Holden’s Australian presence would consist of a national sales company, a parts distribution centre and a global design studio. Ultimately, a lot of the decisions that led to the closure was made by bean counters and HR people and fourth level power point generator and analysis. A strong Australian dollar made Holden X unprofitable, by an unfortunate coincidence, the tide turned after the factory closures and Holden has since been

paying the price for a weak Australian dollar. The exchange rates with Holden’s two biggest source countries have climbed by between 15 and 18 percent since it stopped making cars two years ago. Also due to the lack of investment in new models by its parent company General Motors in the wake of the Global financial crisis in 2008 and 2009, its current showroom car line up looks very old and not to the latest technologies. In addition, 2018 saw its lowest monthly sales since the brand was established in 1948, and the weakest annual tally since 1954. Holden has been left with a spartan model range whilst rivals have filled gaps with niche models and SUVs of all shapes and sizes. General Motor’s promise of 20 new models by 2020 was never achieved and whilst the former Toyota executive Dave Buttner was lured out of retirement in 2018 with the assurance of a vast and revised model range, those plans were taken off the table within his first nine months in the job. This led to Holden being comparatively less competitive against other brands and hence contributed to such low sales growth. There was no recovery plan due to the sheer costs that would have come with it. It would have cost General Motors $1 billion to just develop the next Colorado ute, of which only 50,000 are sold in the Asia-Pacific region a year. Car companies don’t have endless supplies of cash and the cost of keeping Holden alive was unrealistically costly. Another contributing factor to the demise of Holden was that not long after their factory closures, the company decided not to renew the franchise agreements of some of its longest standing dealers across the country. Furious of what felt like a betrayal, the axed dealers simply installed rival brand such as Nissan, Kia, Hyundai and others who have consequently outsold Holden ever since. In conclusion, General Motors is still a business and as they could not make any money anymore, they have decided to close down in Australia and New Zealand, focusing on the US....