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Delta wing: The imported Cruze sedan will precede local production of up to five Delta-platform small car variants by Holden.

GM Holden could not have survived on Commodore alone, says federal industry minister

31 Mar 2009

GM HOLDEN would not have been viable without its small-car manufacturing plan that will eventually produce up to five model derivatives, according to federal industry minister Kim Carr.

The all-new Holden small-car family, to be built on General Motors’ new global C-segment chassis architecture dubbed Delta II, will comprise a Holden-designed turbocharged five-door hatchback from late 2010 and a locally-built Cruze sedan to replace next month’s imported model from Korea.

GoAuto sources say a further three Delta-based models will eventually emerge from the Holden factory, which will also have the ability to produce the all-new Astra yet to emerge from Opel, as well as Chevrolet’s Orlando seven-seat people-mover and even GM’s ground-breaking Volt plug-in hybrid.

Holden announced on December 22 that it would manufacture an all-new small-car line alongside the Commodore model range at its Adelaide factory from the third quarter of 2010 “with assistance from the federal and South Australian governments”.

In addition to $149 million over three years from the Australian government’s Green Car Innovation Fund (GCIF), which will contribute one dollar for every three dollars invested by Holden in the project, the SA government committed $30 million over four years.

That should take the total ‘Delta’ program spend to more than $600 million, including $450 million of which was ‘quarantined’ from within GM, which was this week given 60 days to come up with a new survival plan for US president Barack Obama’s automotive taskforce, under new chairman and chief executive Fritz Henderson.

13 center imageTop: The Holden Cruze sedan. Below: Federal industry minister Kim Carr.

Mr Carr said last week that the plan to build an eventual family of small vehicles off GM’s first truly global compact-car platform was essential to GM Holden’s survival.

“The new Delta opens up into about five different streams in its later phases, but to get it up in a period like this, when General Motors internationally is facing such acute questions, is remarkable,” he said.

“It made the difference between General Motors (Holden) being viable and non-viable,” Senator Carr told GoAuto on March 24 at a function to open a $12 million production facility at Hella’s Mentone plant.

Hella will provide Toyota Australia with lighting clusters for this year’s facelifted Aurion and Camry, including next year’s locally-built Camry Hybrid, which became the first beneficiary of the Rudd government’s $500 million green-car program when $35 million was pledged to the project last June, before the fund was due to have started in 2011.

Toyota later said it would have built the petrol-electric Camry here anyway, using imported hybrid drive components, before the 10-year green fund was expanded to $1.3 billion and brought forward from 2009 as part of the federal government’s $6.2 billion car industry plan to 2020.

Holden’s 3600 Elizabeth assembly plant workers are on reduced wages during 26 ‘down-days’ in April as Holden tries to slow production to meet a 20 per cent slump in local demand – and even bigger sales downturns in its key export markets – this year.

But they are bracing themselves for worse to come, with Holden chairman and managing director Mark Reuss on record as saying “2009 has to be a year of transformation for our industry including Holden” and admitting that he loses sleep agonising over a viability plan that will “reinvent the industry from the core”.

Mr Reuss, who is also the president of the Federal Chamber of Automotive Industries (FCAI), this week warned that Australian car-makers could face liquidity problems like their dealers and overseas counterparts if stock levels continued to rise, the market continued to contract and commercial finance remained tight.

European GM affiliates Opel and Saab, which are under strategic review by the world’s number-two auto-maker, have both sought government funding to continue to operate.

Senator Carr said the main thing now was to “keep the doors open.”“We’ve got to ensure that we move through this period as quickly as possible,” he said.

“We’ve got to maintain capacity. We will build on local content or localisation plans as we attract new investment.

“The main thing in a period in which there is an intense shortage of capital investment is to actually get those projects up and running. That’s the first priority, and we can build from there.

“That’s one project. So it’s a major contribution towards the future of the industry. That’s what we want to look to – we want to get through this, build on capacity, ensure that in the long-term the industry survives.

“And it’s not me saying that, that’s what General Motors (Holden) actually said to General Motors in America about the importance of the plant,” said Senator Carr, whose statements echo that of the second GM restructuring plan submitted to the US treasury department on February 17.

In the section that relates to Australia, GM’s treasury presentation said: “Continued local production has become more challenging due to changes in market preferences.

“GM’s local subsidiary (Holden) and the Australian government have developed a plan to bring to market a new, more fuel-efficient vehicle, with project funding provided by the Australian Government in the form of permanent grants.

“With this support, Holden is projected to be a viable operation, making a positive NPV (net present value) contribution.”

While the Ford Motor Company is the only member of the US Big Three not have requested direct government financial assistance, Ford Australia is the only local car-maker that is yet to be pledged funding from the GCIF.

Contrary to popular belief, Ford says the reversal of its decision to close its six-cylinder engine plant in Geelong was made possible not by the GCIF, but by the reactivation of funds from the former Automotive Competitiveness and Investment Scheme (ACIS), which will be distributed in the form of import duty credits.

Ford announced plans to produce its next-generation Focus small-car in Australia more than 12 months before Holden revealed its small-car plan, in 2007. If both projects come to fruition, Australia will for the first time be part of the global small-car production program for both Ford and General Motors by 2011.

Ford says that although it is yet to be allocated GCIF money, it is in the process of formulating projects that will allow it to do so.

Ford Australia spokeswoman Sinead McAlary said: “We have not got any money from the GCIF. But that is not to say we are not working on things that will be applicable to the fund. We are working on projects that will attract interest from the green fund.”

Just as Holden will be capable of building everything from the Cruze to the Astra, Orlando and even the Volt, Ford has this year also announced that a hybrid version of the next Focus will also be developed – at this stage only for sale in the US – by 2012.

Read more:

Holden restructuring could be only weeks away

Melbourne show: Holden comes clean on Cruze

Holden designs bew hatch

The Road to Recovery podcast series

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