Friday, March 4, 2011

Deadline set for Commodore future

The boss of Holden Mike Devereux told Australian journalists in Detroit overnight that General Motors executives in North America want to know if Australians will still have an appetite for large, rear-drive sedans in 10 years' time -- and he's betting they will, despite the odds.
The Commodore has been Australia's favourite car for 15 years in a row, but sales of large six-cylinder sedans have been in decline for most of that time. They dipped again last year -- by four per cent -- in a market that grew by 10.5 per cent.
Although the Commodore posted a modest increase in 2010, sales are running at half the rate they were in the late 1990s. Last year, the Ford Falcon posted its lowest sales in the 50-year history of the nameplate, also falling below the 30,000 mark for the first time.
While the speculation over the future of the Ford Falcon continues -- whether it will be made locally, imported or replaced by the front-drive Ford Taurus -- Holden says it is poised to not mess with the Commodore formula.
"We will know in the next six months what the future of the Commodore -- the next generation -- will look like," said Devereux, who admitted for the first time that front-drive was on the consideration list, but quickly ruled out.
"We looked at everything, that's what all car makers do, that's the prudent thing to do," he said. "But we are under no obligation to go that way, Holden can choose its own path."
He said in his seven months in the top job in Australia, he quickly grasped that Australia is a unique market.
"The rear-drive sedan may not be flavour of the month in other countries, but it is still very much alive in Australia," he said. "If we can deliver the right [size] and the right economy, we can continue on the path we're on."
He said the deadline was set seven years out because that's how much lead time is needed to reconfigure the Holden factory in Adelaide and design new tooling if there were to be a radical change to the Commodore's layout.
"If we go with a complete new architecture (the core structure of a car) then we need to plan well ahead of time," he said. "If we decide to continue with what we have, that's fine, but we need to be sure that's the right decision because we can't go back in time and change it."
Devereux admitted that Holden had evaluated a new General Motors front-drive platform that currently underpins Toyota Camry competitors in Europe and North America -- as well as one that underpins the Chevrolet Impala -- but they have all-but been ruled out.
"It was an option, and still is an option if we really wanted it, but frankly that would not be a Commodore, it would not have Commodore DNA," he said.
A switch to front-drive would automatically wipe a quarter of the Commodore's sales tally -- that's roughly how many V8 rear drive luxury or sports sedans make up its overall volume.
Another argument against a switch to front-drive: the Toyota Aurion V6 front-drive sedan has failed to get near Commodore or Falcon sales despite Toyota's marketing power and the fact that the Aurion has a more refined and efficient engine, and accelerates more quickly.
One rear-drive option under consideration was to downsize the Commodore by using a platform that is going to underpin a new Cadillac small sedan -- but this would be more costly to build and the car would be less space efficient than many medium-sized four-cylinder sedans.
The Carsales Network understands the most likely scenario is that, beyond 2017 -- when the next generation Commodore is due -- Holden will continue with a modified version of its existing Commodore architecture, but will develop an all-new body and engines.
This happens to be the easiest and cheapest of all the options under consideration.
But that doesn't mean Holden will have an easy run. The company says its factory must produce at least 105,000 vehicles per year to remain viable. Last year the Adelaide plant built fewer than 60,000 vehicles. Toyota built in excess of 120,000 vehicles (most of which were exported) while Ford built fewer than 45,000 vehicles in 2010.
"You have to do more than 105,000 or 106,000 cars a year to make the thing go," Devereux said candidly of Holden's factory in Adelaide.
The number of cars Holden makes locally is likely to grow when the Cruze sedan small car comes online in February, joined by the Cruze hatch in November.
Holden also has export ambitions for the Caprice as a police car for North America. The company has begun taking orders but is yet to reveal how many have been sold.
"Exports should not be crucial to our business, but we'd be stupid not to look at every opportunity," he said. "Just because we don't have to export cars [to remain viable] doesn't mean we don't want to."


mubashar said...

Thanks for this informative post.

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