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Holden's Adventra in the dark

Sales pitch: Holden slashed $4000 from the price of Adventra in July.

The business case is struggling to stack up for Holden’s locally-built SUV

18 Aug 2004

WHERE to now for Adventra? That’s the question ringing through the halls of power at Holden as its top executives debate its future SUV course.

The company is struggling to develop a viable business case for the wagon that also enables a significant degree of design separation from the Commodore donor vehicle.

At the core of the debate is Holden’s desire to stay in the lucrative fleet wagon market, which means providing a vehicle cheaper than could be built within SUV parameters.

But a locally-built medium-sized off-roader is an important component in Holden’s multi-pronged plan to tackle the SUV market, where it is having its ears boxed by Toyota.

The ideal scenario would be to build both variations, but that’s where the business case starts to go south.

"It’s a really hard one and probably the hardest call we’ve had to make in a long time," a Holden insider told GoAuto.

"We are already late ... the design and engineering guys can’t do anything until a shape is agreed upon, and that is really hard work."The current Adventra is a jacked-up Commodore wagon with the new $50 million CrossTrac all-wheel drive system underneath it.

It has not been a sales success – so much so that Holden slashed $4000 from the price in July.

Based on the current V-car platform, it was never intended to offer the same level of design or mechanical differentiation from its donor vehicle as the Ford Territory has from the Falcon.

That has hurt it, as has its V8-only drivetrain.

The next generation Adventra will be built on the Zeta global architecture that can be rear or all-wheel drive

This latter issue should be rectified in February when the new Alloytec V6 and Adventra are due to be mated up.

The next generation Adventra – like all locally built Holdens – will be built on the Zeta global architecture that can be rear or all-wheel drive.

The expectation and general indications to emerge from Holden in the past has been that the Zeta-based Adventra would become a fully-fledged cross-over in the vein of the Territory, emerging in 2007.

But that course of action now seems to be far from signed off.

"The more you keep trying to make a Territory out of Adventra, the more cost you add," a Holden executive said. "The more you end up high price rather than low price, the more uncompetitive you become.

"You end up competing with 12 other makes who all have very good SUVs. It’s a real hard one, but everyone is saying, ‘We can’t ignore the (SUV) trend’."It is understood that bespoke sheetmetal for a Zeta-based Adventra would cost a minimum $200 million, an investment that Holden is struggling to justify.

"We haven’t made any calls yet on it, we are still working on the options," said another Holden source. "We are watching very carefully.

"We have a great opportunity to watch what is happening in the marketplace as we see some of the competition rolled out and we can watch to see how that plays out over the next months.

"We can go and talk to fleet and people who are traditional buyers of our kinds of vehicles, and say, ‘Now you have watched those cars in the marketplace and you are starting to get a feel of what they are capable of .

"So we can talk to fleets and see how they see the market playing out, because they are an important part of our buyers. And the fact is our fleet people tell us they like wagons, they like space in their vehicles and they like car-like behaviour.

"And that is going to help our decision-making process quite clearly. We are getting closer to the point where we really do need to make a call."The competition being rolled out is Territory, a vehicle that simply has Holden bamboozled. It cannot figure out how Ford can make a profit from a $500 million investment when the sales rate is about 25,000 per year. Holden insiders are convinced that there’s more to the Territory business plan than Ford is revealing, possibly an export program.

Exports could be the key for an Adventra green light.

Holden could even consider giving the new Adventra the go-ahead on the basis that exports are a key component of profitability, a risk it has not been prepared to take previously.

Adventra is currently selling at a little over 200 per month, but the real target figure is a minimum 400 to 500 per month.

While the ‘tool of trade’ wagon market has been in gradual decline for some time, Holden actually sold a record 18,273 Commodore wagons in 2003, benefiting from Toyota’s pull-out with Camry and the shrinking sales of the Falcon and Mitsubishi Magna.

Holden expects to sell another 18,000 cars in a market segment that will probably finish up around 30,000 total in 2004.

What makes the wagon market more attractive to Holden is the load lugger is fundamentally no more expensive to build than a sedan but is sold at a price premium.

Holden scours the world for all-terrain wagons

HOLDEN’S push into the SUV segment could see vehicles sourced from South Korea, Thailand and North America, as well as Australia.

A successful attack on this growing area of the market is vital if Holden is to succeed in its plans to wrest back leadership of the Australian new vehicles sales market from Toyota.

Toyota currently commands 30.8 per cent of the SUV market, while Holden can claim just 3.8 per cent.

Apart from its own far-from-finalised plans for a locally built SUV, Holden has interest in two Daewoos, an Isuzu and the next generation GMT361 range of US heavy duty ‘trucks’ such as the Chevy Trailblazer.

The two Daewoos are the C-100 being developed on the GM Theta (Chev Equinox) platform, which has seven seats and V6 capability. This could be in Australia as soon as late 2005 or early 2006 to slot into the medium category.

But less well known is the C-105, a smaller five-seater, four-cylinder compact SUV that is based on the old Daewoo J200 platform.

Started by the old Daewoo Motor Corporation, GM Daewoo has continued on development.

The styling of both cars is heavily influenced by former Holden design director Mike Simcoe, who served a stint at Daewoo before his recent posting to the US.

The potential Isuzu product is based on the Rodeo separate chassis and is predominantly targeted at emerging Asian markets. While no guarantee for Australia, it is under consideration.

13 center imageLEFT: GoAuto graphic artist Chris Harris's impression of what the Rodeo-based SUV could look like.GMT361 replaces the current GMT360 range from late 2007 and appeals to Holden as a competitive offering against the dominant Toyota LandCruiser.

GM product czar Bob Lutz has said GMT361 will be package protected for right-hand drive but the corporation’s bean counters are reportedly struggling to make the sums add up.

Still, there is confidence within Holden that the correct right-hand drive decision will be made, one insider saying Holden boss Denny Mooney was "bloody minded" about making it happen.

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