Cruze price bruise

HOLDEN'S small Cruze four-wheel drive is on hold while the company figures out whether it can actually make any money out of the re-badged Suzuki.

Officially, the Cruze is now due to go on sale in June, set back from March when the five-door hatch was unveiled at the Tokyo motor show.

But Holden's sales and marketing executive director Ross McKenzie confirmed last week that the Cruze was still "not a go program".

He said Holden was in heavy negotiation with GM alliance partner Suzuki over transfer pricing. Holden wants to price the Cruze just under $20,000, but it would have to be around $22,000 to make money at the moment.

And Mr McKenzie says that's unacceptable.

"Once you start pushing it up well over $20,000 you're in a whole different class, different type of buyer, you're in there with Hondas and the like - forget it, it's a different type of vehicle." The Cruze is based on the Suzuki Ignis small car, with a body kit and an all-wheel drive system. It was first revealed as the Chevrolet YGM-1 show car at Tokyo in 1999.

Despite the name, the YGM-1 was actually styled by Holden, which also performed much of the engineering work and was responsible for the Cruze moniker.

The production version has lost a lot of the show car's tough looks but does have a 1.5-litre four-cylinder engine, on-demand four-wheel drive, big bumpers, new Vectra-style square headlights, alloy wheels, sports seats, air-conditioning and central locking.

While not expected to sell more than a few thousand units per annum, the Cruze was seen by Holden as a way of at least gaining an entry into the booming small 4WD market, where it is without representation at the moment. It was also seen as a way to increase its access to the youth market.

However, rather than being a competitor for the Honda CR-V, Toyota RAV4 or Subaru Forester, the Cruze is actually a size smaller and lines up against the Daihatsu Terios and, ironically, the Suzuki Jimny.

"Like everything you do in this country, from the time you do the business case until you are ready to go, the exchange rate goes feral on you, and what looked like an okay program isn't an okay program any more," Mr McKenzie said.

"We're sitting there looking at this saying 'we've still got to make this thing work, it doesn't work yet'." Mr McKenzie said he would not sell the Cruze or any other vehicle at a loss simply to get it into the market at a competitive price. But he denied that the Cruze had already been axed.

"I'm not saying that, I'm saying the program financially is not a satisfactory outcome for us yet," he said.

"We are still in negotiation with Suzuki about the transfer pricing and we haven't resolved it so we are still having debates about it." Mr McKenzie said it was up to Suzuki to "come to the party".

"We've said to Suzuki 'that's what we need' and they've said 'that's what we need' and there's a fair gap."

Holden chief reveals future directions

HOLDEN chairman and managing director Peter Hanenberger hosted his annual year-end media luncheon in Melbourne last week. In his speech, Mr Hanenberger: * Predicted Holden would achieve total volume of 171,000 units in 2001, its second best ever. He forecast the company would up that by 1000 units in 2002.

n Forecast a total vehicle market of 770,000 for 2001 and 750,000 for 2002, with Holden's market share set at 23 per cent.

* Revealed 2001 exports would stay at about the same level as 2000, 29,000 units, but said that 35,000 was the aim for 2002.

* Revealed Holden had test-marketed the Caprice and Commodore S in the Middle East and would start exporting both models in January.

* Said the South African dealer network was being developed with plans to export the Ute after an absence of 30 years.

* Confirmed Mexico continues to be evaluated as a potential market and stated the US continued to be a goal for the company.

* Confirmed the AWD Holden was now testing in real world conditions in the Outback and alpine regions.

* Revealed Holden was working on a new engineering project in China "which will greatly strengthen our engineering presence in the region".

* Said Holden's capital expenditure in 2002 would be $382 million, up 83 per cent over 2001.

* Said new model releases in 2002 would includes the Astra convertible in January, the VY Commodore and Ute, the all-new Vectra, two niche products and 10 limited editions.

* Revealed an increased focus on the development of HSV and Holden By Design (the latter range of aftermarket parts are being re-styled by Mike Simcoe's team at Holden).

Holden also announced a partnership last week with the Kidsafe child accident prevention foundation to improve public awareness about the use of child seats and baby capsules in cars.

The program will include safety inspection days at Holden dealers, with 20 planned next year, and the publication of educational materials.