Australian SUV not on Holden agenda – for now

HOLDEN says it cannot justify making an SUV in Australia alongside the next-generation Cruze and Commodore unless it can secure a “massive” export deal – something it says is unlikely considering the high dollar.

Furthermore, while SUV sales are high, Holden chairman and managing director Mike Devereux says the glut of models now in the marketplace means none achieve the overall volumes required to justify local production.

It has been speculated that Holden has considered building an SUV at its South Australian factory to capitalise on booming segment sales, thereby adding crucial volume to the loss-making facility.

Adding a layer of credibility to this is the fact that the platform set to underpin the next-generation 2015 Australian-made Cruze small car, known as D2XX, will form the basis of a General Motors SUV line.

The Australian Workers' Union (AWU) last week also urged Holden to consider shifting some Captiva production from South Korea to its Elizabeth plant, following a similar path to the Cruze.

However, Mr Devereux told a business lunch last week that a locally built SUV was not on the cards for the company, despite the sales trend towards the vehicles.

VFACTS figures to the end of May show that SUV sales are up 11.5 per cent this year, with more than 136,000 examples of the high-riding wagons sold in the first five months.

“A business case for us to do SUVs here would also have to be predicated on us having a massive export footprint, and with the uncertainty around the cost of the dollar here, and the manufacturing costs, that’s a tougher equation for us,” he said.

“We try to stick with making a couple of cars that can be super-popular and then if we can export, we do it opportunistically like we do with the SS (a Commodore rebadged as a Chevrolet for the US market), but you know we might export 15,000 or 20,000 cars next year, not 100,000 cars.”

Mr Devereux said the sheer scale of choice for SUV buyers – that end of the market is among the most diversified – meant even the biggest sellers struggled the get the requisite volume to justify local manufacture.

“One of the things that you’ve seen over time, and this is one of the reasons that we do get a lot of criticism, is that SUVs are booming,” he said.

“But here’s the thing: there are 80 different SUVs that you all can buy, there are six or seven different types of large cars, there are about 20 different types of small cars. So even though SUVs are booming, there’s a huge amount of choice.

“In any given month there aren’t any SUVs in the top-10 selling cars in the country. We at Holden, and actually Ford and Toyota, in order to make things in this country, primarily for this country, have to make top-10 selling cars.

“So while on the surface seems like wow they’re booming, everybody buys an SUV, well yeah, and there are 80 different ones you can buy.”

Industry sales statistics show that there are actually more like 40 small cars to choose from, but it is still a fact that the total SUV market has a far greater rate of segmentation.

Yet VFACTS figures also show that two SUV models are among the 10 most popular models in Australia this year – the Mazda CX-5 and Hyundai ix35.

This expands to three vehicles if you count Holden’s own Captiva 5 and Captiva 7 as one model line, which has combined sales greater than the Mazda and Hyundai, and even the Commodore (8441 units to 8157) – although the new VF series now on sale is expected to improve the large car’s outlook.

Fellow Australian car-maker Ford makes an SUV here – the Falcon-based Territory – sales of which have eclipsed the Falcon this year. It also exports the car – albeit on a tiny scale – having sent 100 units to Thailand last year priced close to $100,000.

Of course, this vehicle will be discontinued when Ford closes down local production in 2016.

The third local car-maker, Toyota, is also negotiating with the federal government over plans to add a third model to its Australian car-making operations – a car understood to be the RAV4 SUV.