Crushed by Corolla, Holden looks ahead for Commodore

THE Toyota Corolla's emergence as the nation's biggest-selling vehicle during September ended a lengthy domination by Australian-built large cars, but GM Holden managing director Denny Mooney said the outcome was forseen.

"I think we knew it could happen, the way the small-car market was growing and given what was going on with the upper-medium and large car segment," he told GoAuto at the Sydney motor show.

"We've talked about that a lot this year, but our product is in the last year of its lifecycle and the Falcon has been out there for a while.

"There hasn't been a lot of new products in that (large car) segment for a while. I think you'll see a lot more energy and excitement in the segment over the next 12 months." He pointed to Mitsubishi's Australian motor show launch of the crucial new 380 sedan, which will be followed next year by the debut of the all-new VE Commodore, as well as a Toyota Camry and Avalon replacement.

However, Mr Mooney said September's sales result was not necessarily an anomaly.

"A lot will depend on what happens with oil prices," he said. "They're already starting to settle back down. If it settles back down further you'll see people getting back into those sorts of products (large cars), where they want the safety and they want the roominess.

"And when you look at day-to-day driving, the weekly difference in the amount of petrol you would use is probably just $5 or $10 - even at today's petrol prices." However, Mr Mooney did concede that fleets were downsizing and that alternative engines - including diesel and petrol-electric hybrid - were on the agenda.

"There has been some shift in fleets to four-cylinder cars," he conceded. "Fleet managers look closely at their operating costs. But when you look at your operating costs, and you're running a fleet, there's more than just the end-use cost of petrol. They look at residuals and resale values when they talk about their total cost of ownership.

"As novated leases get more popular - what we would call "user choosers" - those people are more likely going to pick what they want to drive, not what the fleet manager gives them to drive.

"If you've got an exciting car that people want to drive, you're going to maintain the fleet business." As for a diesel engine in Commodore and its derivatives, Mr Mooney said: "The VE Commodore is due in mid-2006, but diesel is definitely further down the track.

"We have a (diesel) prototype running around, but there are a lot of barriers to diesel right now. Not every service station has diesel fuel. And there's the stigma associated with the smell. You know, if you get diesel fuel on you it's like a cologne, it stays on you.

"So you've got to overcome that stigma that a lot of consumers have on their mind - that they're dirty, smelly - which they aren't. Modern diesels are very clean, as most of us know, but the public doesn't necessarily see it that way.

Hybrid? "We're working on some hybrid stuff," he said. "The AH2 GM hybrid project has been in the press a lot lately with the BMW/DaimlerChrysler joint venture.

"That hybrid technology is applicable to our product. It's geared towards a rear-wheel drive configuration - so it's geared towards a Commodore kind of product." As for whether hybrids are cost-effective, Mr Mooney said "the jury's still out".

"That's the big debate: how cost-effective are hybrids really going to be? Obviously, as fuel prices go up it certainly looks more reasonable." And is it workable in right-hand drive? "That's one of the things we're working on right now - packaging."