Second car for Holden plant?
BY JOHN MELLOR | 8th Oct 2008
The latter, which would be based on the Chevrolet Cruze unveiled at the Paris motor show last week, has more legs because it has been revealed that the Holden design centre in Australia, along with design centres in the US, Europe and Korea, were co-operatively engineering the car.
News of the car came as GM Holden was negotiating an enterprise bargaining agreement with the AMWU. It appears that Holden outlined to the union the potential business case for building a smaller car than the Commodore in Adelaide.
Unable to contain their excitement, union leaders leaked the news to Adelaide media.
But GoAuto understands that building a smaller second car in Adelaide is a mere glimmer in the eye of some planners at this point and has many hurdles to clear before it is seriously presented to GM regional headquarters in Shanghai.
Nevertheless, Holden is uniquely placed to build a second car line because it still has the Vectra assembly line in place from the ill-fated venture to sell locally-made Vectras in the late 1990s. So Holden can physically make a second car.
With Commodore sales in Australia under pressure, it would make sense for Holden to spread the risk of its manufacturing operations into another market segment and offer Australians an alterative-sized car from its plant.
Such a move would help guarantee the future of Holden manufacturing in Australia if Commodore volume is further affected both locally and in export markets.
But what car? The poster boy for the Holden tribe would be a compact VE Commodore – the Torana.
Such a car is known to be favored by GM product Tsar Bob Lutz as it would certainly appeal in the US market, where downsizing will remain a focus.
And with the Australian dollar returning more exporter-friendly levels, it could make a lot of sense in the US and in the Middle East.
The global V6 engine can be run at 2.8 litres, GM knows how to do cylinder deactivation and Alfa Romeo sells a turbocharged version of the engine that is made in Australia.
But there is a catch. For a start, if they tried to build a smaller car off the Zeta architecture, it may not be small enough.
In addition, the cost of making a compact Commodore would not be much less that making a full-sized Commodore. Yet, if the car was going to compete in a lower segment, it would have to sell for roughly $10,000 less than a Commodore.
That simply leaves too little money on the table to make it financially viable.
Holden would most likely steer clear of a Vectra-sized car given that the medium car market is such hard work.
The fact that Holden only ever sold a maximum of 9500 Vectras a year (both locally-made and imported) during the heyday of its local production of the car indicates a certain reluctance would set in around the boardroom table if that one was ever floated again.
More likely, Holden would favour the Delta platform on which the recently shown Chevrolet Cruze, the next Astra and the next Holden Viva are based.
Astra had a very good track record in Australia, with between 26,000 and 33,000 sales a year between 2001 and 2005.
With the local market swinging to smaller cars and Ford moving to make the Focus here, Holden would have a foot in that market and also have Ford’s measure.
There is also increased export potential for Holden in the region. New Zealand is obviously in the mix, but India (which has a tariff rate of around 110 per cent) and Japan (which effectively bars imported cars) are out.
But, unlike the Commodore, which is prevented by regulations from penetrating the Thai market, in spite of the free trade agreement with Australia, this smaller car could be exported to Thailand in significant numbers.
And, if GM can generate export credits from South Africa, it would, like Ford, be able to send Australian-made cars into South Africa duty-free.
By 2011, when all this would come about, South African import duty would be around 25 per cent. This would give an Australian-made Astra/Viva some headway in that market.
Read more:
First look: Holden's Viva to CruzeTorana role call
Torana tip-off