GM Inside News Forum banner

Australian-made cars just don't sell? Bollocks!

9K views 85 replies 32 participants last post by  BBDOS CV8 
#1 ·
Car Advice

Australian cars don’t sell? Bollocks
Opinion: Mike Costello by Mike Costello Senior Editor

It’s an oft-repeated line — Aussie cars just don’t sell any more, hence the need for the local brands to shut their local factories and become full importers, something each will have done by the end of 2017.

I’m well versed enough on the economic and market-specific headwinds that are said to necessitate the end of Australian car manufacturing. Labour costs, scale, segment fragmentation… the list goes on.

And even though our weakening dollar makes our currency flows less favourable to imports — ergo more conducive to the sale of domestic goods — the relaxation of trade imposts (free-trade deals and the like) still work their magic.

So, that’s out of the way. I’m not so naive that I don’t ‘get’ the economic reasons for Holden, Ford and Toyota closing their plants and becoming sales, marketing and engineering divisions here instead.

Indeed, Australians have bought almost as many German-made cars (59,744) as Australian-made* ones (61,359) this year.

What I don’t get, however — and what I rather resent — is the argument trotted out that Australians simply don’t buy locally made or developed product.

Look, it’s all relative. Market fragmentation means scale is such that locally-made cars are a shadow of what they were.

The days in the late ’90s and early 2000s – where we saw Holden Commodore monthly sales nudging 10,000 and Ford Falcon sales pushing 6000-7000 – are clearly over and won’t come again.

In fact, the market’s top-selling cars — usually the Toyota Corolla and Mazda 3 — are lucky to halve that total, such is the nature of fragmentation.


But the relative demand for some Aussie cars is far less diminished. Raw volumes of cars such as the Commodore and Toyota Camry are down, but they’re still among the market’s top-sellers.

I write this little story in the shadow of the release of August’s car sales figures, called VFACTS and compiled by the Federal Chamber of Automotive Industries (FCAI).

What did they show? Off the back of very strong retail campaigns from Holden, the Commodore sedan and wagon was the third most popular vehicle in the country, with 2144 sales.

Add the Holden Ute to this (the Lion brand doesn’t call the Commodore Ute a Commodore anymore), and its 2616 sales for the month came within a whisker of knocking off the Mazda 3. Add the 151 Caprice monthly sales in, and the Holden locally-made family overtakes it.
 
#2 · (Edited)
As I've said repeatedly: just as in America the top-selling cars don't sell in volumes like they did but still hold the same relative market percentages, so does the Commodore.

It still outsells every SUV/CUV on the market.

What's changed the last month? For the first time in many months, they've actually been advertising the bloody thing. It's a very desultory ad made by whoever the mixed-message marketing company is that Holden's using these days, but at least it's an ad.



Ford is going because it's wanted to leave for twenty years. Toyota is going because it was only here to A) beat tariffs (gone) B) get the locals closed. As it turns out, it's allies were in Detroit.

It's extremely foolish to shut an efficient local manufacturer whose product still sells in volume (and ATP, and more importantly margins, on any Commodore is still higher than any Corolla or Mazda 3). Especially now Australia is about to hit a resource-boom-ending recession and the dollar is tipped to drop into the US60c range. The other day a story appeared saying the Euro boom in Australia could be ending, with VW Golfs tipped to go from $22K to $27K. That takes them from 'maybe I could swing a Golf' to 'nup - back to Hyundai'.

Hell of a time to start importing your range-topping cars from Germany.

With a full range of models (including LCV and SUV) and proper marketing and distributionthere's no reason GM couldn't have eked out 4 or 5 $billion more out of Zeta before replacing it with another modular platform and continuing the lead the market in raw numbers.

Coupled with a proper export programme of VFs (like a G8 GT-equivalent SS as well as the GXP-equivalent model, and a return to the Middle East) and it could have well continued to sell extremely well at home and abroad. Certainly enough to make it worthwile continuing to invest.
 
#3 ·
I don't think it is a matter of origin. The market has changed and GM and Ford were slow to react.

PS: I would buy almost any sedan before almost any SUV ;)
 
  • Like
Reactions: mang01
#4 ·
Despite having excellent V8, RWD products, Australians still want to buy 3's and Corollas

 
#5 ·
To too many people a car is an appliance.

Let me put it this way, if all your driving is stop-go rush hour traffic does it matter what's under the hood? Even as a car fan I would say it won't.
 
#8 ·
Just to clarify in case no one was paying attention to anything BBDOS posted

Australians are not wanting Mazda 3 or Corolla more than COmmodores or Camrys

Australians want 60 different brands of SUV,Light Commercials, Large cars small cars ect ect

The top ten today is vastly differnt to 10 years ago but we're buying more cars

No one car will ever sell 10k units a month like they used to
 
#10 · (Edited)
Nope - Ford cut the Falcon off at it's knees in 1997 by trying to exit it for the Taurus when the Falcon had been on top of the Australian market for over ten years (thanks to GM foisting an undersized and underdone Commodore on Holden in 1978 instead of letting Holden 'roll their own'). That's utes/commercials and a best-selling Fairlane and LTD line, too.

Falcon never recovered from Ford's tinkering and halved in volume between 1997 and 2003, when it recovered with an Australian-designed refresh. It almost made it back to No 1 in 2005.

GM took a division outperforming every other in the noughties (i.e. making a profit despite paying GM's ridiculous 'IP' fees per car it made), successfully developing export markets on three continents, and turned it into a basketcase within ten years. That was GM's choice. Holden was No. 1 in Australia with daylight second and Toyota third in 2002, with the bestselling large and small car.

Then GM got rid of a MD who made it so, and installed ex-Cadillac exec (and we all know where they were c. 2003) Denny Mooney who gutted it. Beggining of the end. You screw your market around, guess what - they desert you. That's precisely what happened. Then GM started 'GM International' who inserted themselves as middlemen between GM divisions and their clients. Messed up the Holden/Opel relationship by raising expensive cars to exhorbitant prices and cost Opel probably 30K export units per year. Screwed up M-E exports for Holden and cost them probably 40K units per year.

Holden and Ford Australia are where they are today, because neither parent company understands what it takes to 'win' the Australian market, even though, when both parents intervened their local brand was on top. Read the headline - despite Holden's best effort to hide the Commodore under a rock, it's still No. 3 and with the $Au falling would be positioned to stage a recovery - if they hadn't already starting winding the plant down.
 
#15 ·
I think it's more a problem that the current product that Holden offers is ancient and far behind what the competitors offer.

Commodore numbers have dropped a little and it is a good car still that has circa 70% of the declining large car market.

The big volumes that Holden has lost are in the small car segment, where people are buying other brands, because the Cruze and Barina are ancient and no longer competitive and also from a lack of good SUV's.

Over the next couple of years some of this will be renewed with new models and how well that goes, time will tell I guess, but you can't blame the Commodore for Holden's lowly sales numbers.

As a dealership we used to sell 30 Cruze's a month and 20 Barina's. We're not at around 10 Cruze a month and maybe 5 Barina's. Captiva is still going well, but sells only on price. The ancient Captiva 5 is now finished and the MY16 update is due in January, finally with Mylink and will be our first car with Apple Car Play.

There's some good product coming, whether Holden has completely burnt the market or not, I guess we'll see in a few years time.
 
#16 ·
Interesting Comments timeandhayley.

Sadly I do believe that have already burnt the market and can only sell on price - which them means the cheaper poor more outdated end.
GM does not have the guts to deliver a market portfolio with a car for every segment as the can't even get the good cars in RHD format to Australia.
Opels come close, but will be too expensive and don't have the brand image people wish to lay more cash on.
Troubling times, but they did it all to themselves.
 
#18 ·
I'm far removed from Australia and may need some schooling, but here's my question:

Australia is a small market next to the Asian monster to the north. Is the closing down of the manufacturing more a reflection of economies of scale? Meaning the big markets are in Asia, it makes sense to have production in Asia. Australia's market is fragmented, so no manufacturers vehicles sell in huge volumes, therefore it makes more sense to build in Asia and ship cars to Australia.
 
#36 ·
Other than VF/WN being exported, there is also a heap of Camry's that get taken from Australia to export. So at least some of the ships leave with some cars, but the majority of them would be leaving empty.

We get a Thailand ship basically every week, which does the milk run from Fremantle to Adelaide to Melbourne and so on and then back up to Thailand. Korea is once a month and Europe is 1 to 2 times a month.

They're also making a fair bit of money now doing interstate moves, i.e. picking up cars in Brisbane and taking them to Perth, using the empty space on-board. This is actually quite quick and economical, rather than using the traditional truck/train moves on land.

I do believe in the longer run that new cars will become more expensive. The current pricing is not sensible longer term, especially on your $20,000 drive away type deal on Cruze Equipe, i30/Elantra, etc. Once the exchange rates drop down to traditional levels, circa 50 to 60 cents to the US dollar and when all of the competition moves into so called "up-market" vehicles, the $20k pricepoint will be gone. Already Mazda, VW and Toyota are no longer competing at that pricepoint, their models basically start at the $22k to $23k mark. New Astra and Cruze will likely come in at a similar pricepoint once they arrive later 2016/early 2017. They'll probably continue to build the "Cruze Classic" in Australia as the price leader for a few months longer until they close the factory, but they might also cut production altogether, because I've heard that at the $20k driveaway pricepoint they're losing around $4k per car....

This is also another reason why most manufacturer's are pushing SUV's. They're usually based on a passenger platform, sharing basically all the same running gear, but people will pay thousands of dollars more for the same thing. Look at the Cruze Equipe vs Trax LS. Trax is imported from S.Korea, based on a Barina, shares Cruze motor and running gear, yet sells for $24,000 drive away versus $20k for the Cruze. Every brand is doing it. You can't tell me that an SUV costs that much more to build than the equivalent Sedan?
 
#37 ·
Exactly. Why sell a pint of milk for $1 if you can call it 600mls in a different wrapper and get $1.40?
I know which I'd be be pushing. The beauty of marketing.
 
#39 ·
The shipping companies would have to be working on next to nothing leaving Australia. The only cars that get exported are to either VF/WN in small numbers and the Camry to select destinations.

There is also a very small market of private buyers exporting small volumes of wrecked cars overseas and also some new/near new vehicles to right hand drive countries that don't get a similar spec vehicle as we receive here, but this market is extremely small. For instance the 4.0lt V6 Hilux, which I believe we are one of the only recipients and some of the upper level Landcruisers. These often find homes in the Middle East and Africa. I know someone who does it and he picks up huge money for them, because they're not available from the local dealers in those countries.
 
#43 ·
Funny how the local manufacturers cling to large cars.....Ford had half a brain with Territory
but where was Holden's Zeta SUV (Utility to our American friends), the perfect companion,
a re-imgagined Commodore station wagon with with more Territory like Proportions.
IMO, Holden would have still been making and selling twice as much every month
 
#45 ·
I don't want to open up old wounds here, but even if Holden did sell twice as many Zetas every month, they would still lose money on every unit, because it is not economic to build cars in Australia under the current union rules & labour rates, without substantial Govt. assistance.

If the $A went under US50c, there might be a case, but why flog a dead horse ? Australia is a "1st world economy" where the labour force is now overpriced when it comes to "Free Trade Agreements".

While I'm old school & don't like the situation, it's fact of life & we have to move on.

Dr Terry

P.S. My current 'daily drive' is a 2004 VY Adventra LX8, I'm now over 60 years of of age & it is far & away the best car that I've ever owned. BTW I have a car dealer's license & have owned, bought & sold hundreds of cars so I can speak with some authority.
 
#64 ·
No, you said "The wholesale price of a 1970s Commy" & the most expensive Commodore at anytime in the 70s was a V8 SL/E @ $10,510.

We will have to agree to disagree on this point, but suffice to say that when Toyota Aust. bring in US built Camrys to replace the local product, their unit cost will be cheaper, including shipping. What is the main difference, check US assembly line worker's pay rates vs ours.

Dr Terry
 
#66 ·
The world that BBDOS CV8 described for you is not just Australia, it is the World over. Auto assembly plants have replaced thousands of human beings trodding over dirty grease-stained floors with computerized robots whizzing across floors that you can eat off. The hourly workers still on the job are fewer in number and being paid a lower hourly rate. This is the case of our modern global economy.

Yet you cling to vision of the past--doggedly trying to find a way to hammer your square peg opinion into the round hole reality. I mean security guards? Really, security guards? You claim that security guards make Australian plants non-viable? Security guards are minimum wage workers that guard buildings, not automobiles. They are the very definition of fixed costs. However, security guards are a tiny contribution to fixed costs.
 
This post has been deleted
#73 ·
This is what I learned from my boss at my first job years and years ago: rule number one "when somebody offers you money, take it".

Did Holden need taxpayer's money? Probably not. But there is/was a small department at Fishermans Bend in charge of getting as many govt subsidies/tax breaks as possible. Only a handful of people, but the return on investment for GM was phenomenal.

This is how big business works. Governments offer them assistance left right and centre because businesses provide jobs and (usually) pay taxes. Taxes in western countries are designed to favour investors and big business. Just ask Elon Musk (Tesla) about his $4.9 billion in government support.
 
#81 ·
It is. But it's cast iron, too large in capacity for a mainstream family-car motor which hurts it's urban consumption and it's awkward to fit in a modern car. The new Falcon's cabin still feels odd - like you're in an orchestra pit despite the large glass area and the offset steering wheel just feels odd.

The cast iron means it's difficult to meet upcoming emissions which require fast warming and going off closed-loop idle faster to cut HC emissions. Plus, the middle cylinders invariably run hotter (need richer mix or run the outsides lean which nets extra NOx) and the long block means equal-length tuned inlets and exhausts are harder to lay out. Means potentially running different fuel mapping and even ignition curves per cylinder for maximum efficiency which means bigger processor and lots of extra R&D.

Ford's done amazing things with it, and it shows the value of optimizing, but they're well into diminishing returns with every dollar they spend on it now. If there were planning a FH Falcon with a new driveline, it'd probably be EB petrol four.
 
This is an older thread, you may not receive a response, and could be reviving an old thread. Please consider creating a new thread.
Top