Holden Chasing Profits, Not Market Leadership, Says Boss

[JoeT]

Holden 'Not Chasing' Market Leadership

Tim Dornin
4 December 2007
www.drive.com.au

Car maker GM Holden says it will focus on ensuring its long-term future as a local producer rather than chase market leadership in Australia next year.

The company believes demand for new cars and trucks will remain strong in 2008.

But chairman and managing director Chris Gubbey said Holden would focus on efforts to ensure the future of its local operations and the long-term sustainability of the Australian vehicle market.

"Everybody loves to have market leadership but my role here is to help Australia build a sustainable, home-based automotive industry," Mr Gubbey said.

"Sustainability being the important factor."

The Holden boss said the company had, in fact, taken some decisions this year that had eroded its own market share, preferring to withdraw from unprofitable sectors of the local market.

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[nota]

I can see why Gubbey centres on chasing sustainability, not market leadership

His comments came ahead of this week's release of the latest sales figures for the car industry which will confirm Toyota as the top-selling brand in Australia for 2007.

Toyota will take an unassailable lead into the final month of the year with strong demand across its product range giving the company more than 22 per cent of all car and truck sales across the country.

In October Toyota outsold GM and Ford combined ..

[ZvetteGuy]

Originally Posted by nota

I can see why Gubbey centres on chasing sustainability, not market leadership

In October Toyota outsold GM and Ford combined ..

Do you have any numbers showing this?! I would like to know to what margin Toyo is leading the Aussie car market...

I tell ya... Toyo is really reaping the profits of building the better vehicle for such a long time... now that they are not the exact 'best' vehicle out there people will have the perception of that for a long time coming...

I hope that GM can come to this place but, it's going to be an uphill climb... but, they're doing a good job so far...

[JoeT]

Originally Posted by ZvetteGuy

Do you have any numbers showing this?! I would like to know to what margin Toyo is leading the Aussie car market...

This news thread will educate you gooder. Australian & New Zealand October 2007 Sales Results

[nota]

Originally Posted by ZvetteGuy

Do you have any numbers showing this?! I would like to know to what margin Toyo is leading the Aussie car market...

And you can also peruse Oz's official data source below for sales, share etc

http://www.fcai.com.au/sales.php/2007/10/share.html

[tgagneguam]

So Holden has admitted defeat? How quaint. Seems like it's time to find new leadership. Funny that people buy into the fallacy that profits and share are mutually exclusive terms, which they of course are not. It's simply a way for managers to rationalize poor performance on the share and profit front. But, again, I'm sure some will buy into it, including some at the RenCen.

Curiously, how is Holden going to address high fixed costs with lower revenue while simultaneously making fat profits? You can only cut so much meat from the carcass. GM is starting a recovery in NA, and that directly reflects investment in product, which is gaining share-evil to suggest, I know-on the retail front. And, the vehicles move with nary an incentive! I prefer a pro-profit/pro-growth strategy any day of the week.

[redTT]

Originally Posted by tgagneguam

So Holden has admitted defeat? How quaint. Seems like it's time to find new leadership. Funny that people buy into the fallacy that profits and share are mutually exclusive terms, which they of course are not. It's simply a way for managers to rationalize poor performance on the share and profit front. But, again, I'm sure some will buy into it, including some at the RenCen.

Curiously, how is Holden going to address high fixed costs with lower revenue while simultaneously making fat profits? You can only cut so much meat from the carcass. GM is starting a recovery in NA, and that directly reflects investment in product, which is gaining share-evil to suggest, I know-on the retail front. And, the vehicles move with nary an incentive! I prefer a pro-profit/pro-growth strategy any day of the week.

You cant compete with Toyota when you cant possibly cover ALL market segments. You simply make do with what youve got. In this case Holden aiming for the more profitable markets. This is the reason why Holden has increased its base commodore prices (less fleet = more resale = more $$$$ and better public perception). In this regard Holden has succeeded with record sales for its pricier WM, luxury, and sport models and HSV with increased sales for all its models.

Holden has also concentrated with its overseas expansion as well as its engineering/design expansion. These cements Holdens future and $$$$$ far better than selling the most cars for the least possible prices.

For several years running now (excluding the VE costs) both Holden and Ford has posted higher profits than Toyota, even though Toyota has sold the most cars.

[redTT]

If you want to chase after sales dominance then in the future you have to compete with cheaper Chinese and Korean manufacturers. For a high labor costs like Australia this simply isnt viable. Good luck to Toyota in cheapening their brand

[Patto1]

Originally Posted by redTT

Good luck to Toyota in cheapening their brand

They already have.

If you want a cheap rental or fleet "hack" buy a bland white Corolla or Camry. Every rental house and cheap large fleet have them.

They have become common as toilets, very cheap and nasty.

This is already starting to drive down Corolla and Camry resale values.........

.

[Stéphane Dumas]

Originally Posted by Patto1

They already have.

If you want a cheap rental or fleet "hack" buy a bland white Corolla or Camry. Every rental house and cheap large fleet have them.

They have become common as toilets, very cheap and nasty.

This is already starting to drive down Corolla and Camry resale values.........

I wish to see the same thing for Corollas and Camrys sold in Canada and the US and come to think about it, the same thing about Honda

[vt6banger]

Im glad Holden and to a lesser extent Ford have dropped fleet sales, these offer minimal profit and poor resale, 4 years ago I purchased a 99 fleet special for $5k aus. a pittance for a 4 yr old car, flooding the market is bad for resale, hence the nz,me,us exports now. these keep production high without reducing profit, well done Holden

[Tico]

The big 3 in the US would be wise to follow the same policy. Volume is meaningless if you are losing billions of dollars maintaining it. I would rather see a small GM and Ford that was wildly profitable than what we have now.

Also I think the press does a huge disservice to the big 3, it's employees and the american public by constantly pointing out that Toyota sold this many cars or the "asian compaines" sold that many more cars. Detroit can put an end to this by making a statement similar to Holden's and backing it up with smaller operations that MAKE MONEY!

[mcool]

Holden should focus on profits instead of outright volume. It's better for the brand and helps them fit within the GM global landscape better. They're going to be exporting large cars for the foreseeable future, and they should hopefully begin to supply Alpha or some other RWD product too. Filling the dealerships of GM's global markets integrates Holden better than before, and it lets Holden build volumes off more retail sales rather than fleet specials.

This is the right approach.

[ericmvest]

Originally Posted by Tico

The big 3 in the US would be wise to follow the same policy. Volume is meaningless if you are losing billions of dollars maintaining it. I would rather see a small GM and Ford that was wildly profitable than what we have now.

Also I think the press does a huge disservice to the big 3, it's employees and the american public by constantly pointing out that Toyota sold this many cars or the "asian compaines" sold that many more cars. Detroit can put an end to this by making a statement similar to Holden's and backing it up with smaller operations that MAKE MONEY!

Revenue is a more accurate measure of how big a car company is. Toyota makes many micro cars, such as their Daihatsu brand. General Motors is very unrepresented in the micro car market. A Daihatsu is not comparible to the typical Opel or Chevrolet, but Toyota counts these cars towards its biggest car company in the World claim.

[tgagneguam]

Originally Posted by Tico

The big 3 in the US would be wise to follow the same policy. Volume is meaningless if you are losing billions of dollars maintaining it. I would rather see a small GM and Ford that was wildly profitable than what we have now...

So how are these smaller companies addressing high fixed costs?

Originally Posted by mcool

Holden should focus on profits instead of outright volume. It's better for the brand and helps them fit within the GM global landscape better. They're going to be exporting large cars for the foreseeable future, and they should hopefully begin to supply Alpha or some other RWD product too. Filling the dealerships of GM's global markets integrates Holden better than before, and it lets Holden build volumes off more retail sales rather than fleet specials.

This is the right approach.

Why can you not marry profits with volume? Why do you have to per se pursue smaller share to be profitable? I certainly don't think that that's the case at all.