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Holden owner General Motors to leave Australia?

By Tim Robson, 07 Feb 2019 Car News

Holden closure

Breaking news suggests General Motors may exit the Australian market - but the Holden badge could stay

Reports have emerged today that global automotive powerhouse Inchcape – importers of brands like Subaru, Citroen and Peugeot into Australia – is looking to take over the importation of Holden from its US parent, General Motors.

While talks are at a very early stage, a report in the Australian Financial Review indicates that due diligence (book checking, in essence) is already underway.

General Motors, however, seems unconcerned by the report.

“We are fully focused on supporting [Holden CEO] Dave [Buttner] in building a strong Holden for the future, as it remains an important part of GM's business," a US-based spokesperson told AFR.

It’s a clever play by UK-based Inchcape, who claims to be the world's largest independent international automotive retailer, with operations in nearly thirty countries.

General Motors is in the midst of a worldwide cost-cutting spree as it seeks to future-proof against an impending turndown in the industry. It’s closed operations in Russia, the UK and Germany over the last two years, as well as shuttering plants and laying off more than 4000 staff in the US.

More than 30 dealerships have been closed locally, while the first year of sales after shutting the doors on local manufacturing was the worst in decades for the 163-year-old company.

Sales fell by almost a third, with key models like the imported Commodore and the mid-sized Equinox SUV failing to fire.

READ MORE Why it failed: one year after Holden’s Aussie factory closure

Holden currently holds a 6.5 per cent share of the Australian market, down from a high of more than 21 per cent in 2001. Subaru currently holds four per cent.

For Inchcape, importing Holden-badged cars directly from GM would work in exactly the same way it does now, but it would not have to bear the same costs as Holden presently does.

For example, fees for back-office functions and other work are paid by Holden back to its parent company, and Inchcape would be able to sidestep these all together, which should mean cheaper vehicles.

Inchcape may also have greater right-hand-drive sales potential for GM due to its presence in the UK market, and rumoured interest in South Africa. All are right-hand drive markets.  

However, any deal may be complicated by elements like Holden’s Lang Lang proving ground, its Melbourne design centre and the fact that the company has had boots on the ground here for more than 160 years. Unravelling Holden from General Motors would not be the work of a moment.

Read more: Holden halts production of Commodore and Equinox

Theoretically, GM may cede the rights to importing cars to Inchcape, while hanging onto the engineering base it recently spent $7 million refurbishing. Lang Lang has facilities for engine and transmission calibration, as well as multiple facilities that are used to test vehicles for both left- and right-hand-drive markets.

Inchcape doesn’t just import cars; it also owns premium dealer network Trivetts, as well as automotive logistics outfit AutoNexus. Should any deal happen (and it’s still very early days) it could catapult Inchcape into the position of being Australia’s second largest car importer behind Toyota

Holden has been contacted for comment.