Holden Announces $6 Million Loss For 2007

[mikmak]

Originally Posted by paul8488

Why do people use redesigning cars as an excuse for not making money? Car companies are constantly spending money on redesigning and redevelopping their vehicles. In fact it's much smarter to constantly have something on the design table, instead of doing it all at once (every 5 years, for example). Saying "Oh, the loss doesn't count because they spent so much redesigning a car" doesn't make any sense to me, because it's an integral part of the budget, not a one-time charge that can be explained away.

It definitely counts alright! I'm sure everyone is aware that in their respective industry, a large portion of profits goes to developing the next level. We are developing software at the moment that is conceptually complete and almost ready for beta testing, but we brain stormed yesterday to figure out some additional steps that need to take place before we start selling it. These costs are always on going, whether they be business development, exposure or product development. The trick is to see it as a long term economic value, ie through a five year window (or period defined by your business plan). Looking at a 1 year deficit or profit is great for media reporting because the differences can be easily compared, but it is really a statistic for the short sighted and reactive. Truth be told, much of the result is a product of decisions made many years in the past. Often it is not indicative of an economic future if you don't have visibility to decisions made last week (which in turn are based more on speculative considerations).

None of this softens the blow of a financial loss in the eyes of those who cant see backwards more than 10 minutes and chances are, if they aren't interested in anything more than the headline, they wont recall the story next year either.

[Dr Terry]

Originally Posted by paul8488

Why do people use redesigning cars as an excuse for not making money? Car companies are constantly spending money on redesigning and redevelopping their vehicles. In fact it's much smarter to constantly have something on the design table, instead of doing it all at once (every 5 years, for example). Saying "Oh, the loss doesn't count because they spent so much redesigning a car" doesn't make any sense to me, because it's an integral part of the budget, not a one-time charge that can be explained away.

Put simply, the majority costs are more to do with retooling & new equipment, which only occurs each major platform change (each 8 to 10 years). Most 'design work' would be done continually, in-house where the salaries are the same each & every year.

Dr Terry

[Richard1098]

Originally Posted by paul8488

Why do people use redesigning cars as an excuse for not making money? Car companies are constantly spending money on redesigning and redevelopping their vehicles. In fact it's much smarter to constantly have something on the design table, instead of doing it all at once (every 5 years, for example). Saying "Oh, the loss doesn't count because they spent so much redesigning a car" doesn't make any sense to me, because it's an integral part of the budget, not a one-time charge that can be explained away.

But Holden is essentially a one platform company, and will write off most capitalised (design, factory design and fitout etc) in the first 2-3 years of a platform's life. You have to remember too, that Holden is probably better off pricing its cars to other GM subsidiaries so that profits are made in the Middle east and US, both of which have lower corporate tax rates than Aus.

[Slick_Holden]

Originally Posted by RedHotMike

Thats the problem. GM had quality small & medium cars but Aus consumers decided they weren't prepared to pay the money for them. Meanwhile the likes of Hyundai etc serve up more and more crap that seems to sell by the boat load. So, I guess that Holden took the attitude of "If you can't beat them, join them".

Red Hot Mike

I just wish they would make there minds up, Go cheap small, Or medium,
I'd like to see them offer a small car with quality, As it's the cheapest way to get into a holden, It's maybe the most important one.
The new Updated version of the epica seems good.

It's hard to believe, for me personally, Hyundai is selling cheap cars that are actually half good today.