Market Insight: Holden small cars on Struggle Street

IN MANY ways still the ‘Big Australian’ when it comes to its presence in the new-vehicle marketplace, Holden has long enjoyed strong sales volume across its entire range of both locally built and imported cars.

If not the outright leader in a market segment, buyers could be confident that Holden’s offering was among the top three and not far behind the best-selling models.

But the situation has changed for the lion brand, particularly in the all-important small passenger car segments where the Barina Spark, Barina and Cruze have suffered severe downturns in recent years and ended 2014 at worryingly low levels for a company that only nine months ago was talking about stealing market leadership from Toyota inside the next five years.

A fair bit has happened since then – from the unremitting rise of Hyundai to the unexpected fall (resignation) of Holden’s chairman and managing director Gerry Dorizas, who is still to be replaced – and the year finished up with Holden sales 5.3 per cent down.

Outside of segments in which Holden's doomed Australian-built cars are still favoured – large cars, where Commodore is king (30,203) upper-large cars, where Caprice (1218) plays second fiddle to Chrysler’s 300 (1580) and 4x2 utilities, where the VF Ute (5596) is in the shadow of the imported Toyota HiLux and Ford Ranger (10,807/5945) – the local car-maker had no vehicles among the top three anywhere in the marketplace, despite being the number-two brand in the land.

Several models contributed to the negative result, but it was Barina Spark (-33.4 per cent), Barina (-30 per cent) and Cruze (-24 per cent) that combined to weaken Holden’s influence in the volume-selling smaller passenger car segments.

These segments were all down in the softening new-vehicle market, however Holden’s downturn in each was deeper compared with rival car brands.

For Barina Spark, 1257 sales for the year was just a third of the 3755 total it managed in 2011 – its first full year of trading – and, as GoAuto has reported previously, is symptomatic of lower fuel prices and tough competition in the traditional light- and small-car segments putting pressure on the sub-light arena.

Yet within the segment itself, Spark’s lack of fire left it well behind rivals such as the Mitsubishi Mirage (6478), Fiat 500 (2995), Nissan Micra (2419) and Suzuki Alto (1871).

This might not be a concern were buyers simply slotting into the next-sized car, but if they were not lured into a Trax crossover (5979), they were either not in, or walking out of, Holden dealerships, with last year’s 6396 total for Barina only about half the number sales staff were signing up two years earlier.

The light-car segment finished 4.3 per cent down last year compared to 2013, but some of the top-selling models surged ahead. Barina’s steep decline left it in 10th place behind the Hyundai i20 (14,979) and Accent (7561), Mazda2 (13,424), Toyota Yaris (12,779), Suzuki Swift (9376), Kia Rio (7925), Honda Jazz (7583), Volkswagen Polo (6607) and Ford Fiesta (6530).

Holden’s standing in Australia’s highest-volume segment – small cars – has also taken a turn for the worse, with the locally built Cruze experiencing double-digit sales declines for three years running, down from 33,784 units in 2011 to just 18,554 last year.

Cruze’s 24 per cent stagger last year came as the overall small-car segment slipped 3.9 per cent, leaving the Adelaide-built model behind the VW Golf (19,178, up 10.6 per cent) and not within cooee of the runaway leaders – the all-conquering Toyota Corolla (43,735), Mazda3 (43,313) and Hyundai i30 (31,505).

Only three years earlier, Cruze returned 33,784 sales for Holden and was within striking distance of the segment leaders – if not outright market leadership.

These are all areas of concern for Holden as it attempts to bring new buyers into the fold and at the same time hold on to longstanding loyalties that are being tested with General Motors’ decision to close its manufacturing operations in Australia in 2017.

Part of the answer lies in the quality of both the product and the offers in the marketplace, and on that front Holden is preparing to radically overhaul its small four-cylinder cars with heavily upgraded and all-new models, most of which were conceived in Europe, are receiving Australian engineering input and are likely to be sourced from nearby countries to keep costs down.

High-performance variants and even an all-new dedicated sportscar are also in the mix to generate more interest in, and excitement around, the brand as it transitions to a full-line importer and at the same time attempts to significantly grow both sales volume and market share.

Yet with no firm word on the forthcoming imported Commodore replacement, a loss of Commodore-based ute sales looming and various other limiting factors in the air, the ‘Big Australian’ needs to first stem the flow of annual sales declines, now out to four years in succession.