Holden's Fleet Buyers Have Driven VE Commodore

[JoeT]

Holden's Fleeting Glimpse

Richard Blackburn & Joshua Dowling
15 July 2006
www.smh.com.au

The first all-new Commodore in nine years is unveiled tomorrow morning but the biggest customers - fleet buyers - have already driven the car.

By this time tomorrow, the look of the new Holden Commodore - the successor to Australia's best-selling car for the past decade - will no longer be a secret.

Photos of the car will be released at a media presentation in Melbourne tomorrow morning and Holden's marketing experts and spin doctors will schmooze the motoring press.

However, it may all be in vain as the people who will judge whether the $1 billion Commodore is a success - fleet customers, both business and government - buy about 80 per cent of all Commodores and they've already seen and driven the car.

The Herald has spoken to several fleet managers invited to the special preview. They came away impressed, but all had the same questions: How much fuel will it use? What is the resale value going to be like?

The answer to the second question is anyone's guess. Holden says the answer to the first question - fuel economy - is yet to be decided as the new Commodore is still in the final stages of development. But it's fair to assume the engineers already have an idea: they've been driving more than 200 test cars on public roads for the past 18 months.

The new Commodore - codenamed VE - must deliver operating cost savings and better resale values if it is to turn around a three-year sales decline, leading fleet managers believe.

Fleet management organisations, the middlemen between fleet customers and car companies, are worried that Holden hasn't heeded concerns about the fuel efficiency of the new Commodore, which is longer and heavier than the model it replaces.

Commodore sales have been on the slide since 2003, in sharp contrast to the rest of the car industry, which has set year-on-year sales records for the past four years.

In 2003 Commodore sales dropped 2.2 per cent. There was an 8.5 per cent fall in 2004 and a 15.6 per cent fall in 2005. In the first six months of this year sales are down almost a third on the same period last year.

This year Holden has sold 26,680 Commodores, a far cry from the 45,783 it moved in the first six months of 1998, just after the launch of the all-new VT.

In its heyday, the Commodore was selling an average of more than 7500 new cars a month. So far this year, it is averaging fewer than 4500.

One fleet manager, who did not want to be named, says his staff have driven the base model (believed to be called Omega rather than Executive), the SV6 and the SS, and were impressed with all three. But Holden couldn't answer his two most important questions, those on fuel consumption and likely resale value. The resale value of the Commodore has nose-dived in the past 18 months and it is at its lowest point in its 28-year history.

Resale value is such an important issue Holden presented crystal balls to some fleet buyers, with the promise it was working on a solution. The crystal ball was apt: the future value of the Commodore is anyone's guess.

"It's a good-looking car and it dates everything else like it on the road," the fleet manager said. "Its size and looks will appeal to families wanting a used car but that's still no guarantee you'll get good resale values. The public are very concerned about petrol prices and the perception is that big cars are thirsty - even if they're not as thirsty as people think they are."

But his team came away impressed with the new Commodore's driving dynamics. "It's a lot smoother to drive. Holden's done a lot of work on the smoothness of the transmission."

But, significantly, this fleet customer didn't place an order even though it can take several months to deliver a large order. He is more cautious about buying the new Commodore than he has been with previous models.

"Holden claims it has tuned the engine management for fuel economy," he said, "but regardless of their claims we'll reserve judgement until we buy a couple [of new Commodores] and see how they go.

"I'm only ordering a few in different grades until we know how much fuel it uses in the real world. The new car is bigger and heavier than the current one and so we want to see how those things affect tyre wear and brake wear as well as fuel consumption. We want to know all those things before we go and order a whole bunch of them."

He was also interested in the LPG version of the new Commodore, which will be available later in the year. The Ford Falcon has a factory-fitted LPG-only system; he understood Holden was perservering with a petrol-LPG system, whose second tank takes up more boot space.

The other key detail missing from the fleet presentation was the price. Large fleets routinely receive discounts of up to 30 per cent on the recommended retail price, but Holden was hinting at a price rise at the VE fleet review.

"They said, 'don't expect all this technology to come cheaply,"' he said, "which we interpreted to mean that the price will rise. That will be another factor in our decision because we have a lot more cars to choose from these days and Ford and Mitsubishi are out there with sharp prices, and Toyota will have a V6 sedan out later in the year. I don't think Holden can afford to be greedy."

Brad Kelly, the national sales and customer relations manager for fleet management company LeasePlan, says fleets are increasingly focused on operating costs and resale values. "Fuel prices are on the tip of everyone's tongues at the moment and indications are that the new car will use as much if not more fuel as the current one," Kelly said. "I think we'd be disappointed if it didn't offer improvements in that area."

He said fleets increasingly asked LeasePlan to do modelling on the cost savings associated with alternative fuels, particularly LPG.

"We've prepared a lot of LPG analysis and people are definitely looking at moving from six to four cylinders."

He said fleet managers were looking at four-cylinder cars, but remained wary of a driver backlash.

"We've got some companies who have put four-cylinder cars on as their pool vehicles to gauge employee perceptions." Kelly does not expect a return to the bumper years when Commodore regularly sold more than 7000 a month.

"In 1997, VT was a runaway success, but that was at a time when six-cylinder cars were on top of the world. The market has changed."

· First official photos of the VE Commodore will appear on www.drive.com.au at midday on Sunday.



Countdown To Commodore Reaches Climax

Andrew Heasley
14 July 2006
www.smh.com.au

Holden's chairman describes it as the biggest event in the company's history since 1948 when its first model, the 48-215, rolled out of Fishermans Bend: on Sunday, July 16 at 10.50am the wraps come off the billion-dollar VE Commodore.

It's the first new-generation Commodore in nine years and a car that's crucial to Holden's local manufacturing business and the embattled local parts supply industry.

It's set to be the most sophisticated Commodore yet, boasting an array of latest safety technology. It's also likely to be the biggest, and heaviest, Commodore ever.

But for all the project's sizeable investment, involving design, engineering and parts supply that has spanned the world, its launch could hardly come at a worse time.

Record high crude oil prices, now passing $US75 a barrel, have sent shockwaves all the way to the local bowser, with unleaded now costing beyond $1.40 a litre. Buyers have reacted and are turning their back on big cars and are increasingly buying smaller, more fuel-efficient cars.

It's borne out by the car sales figures. According to official industry figures from industry statistician VFACTS, while the Commodore remains the highest selling model in Australia, it was outsold by Toyota's Corolla last month.

Big car sales are down 22 per cent this year. Commodore sales are down 26 per cent this year, with just 26,680 sold, almost 10,000 fewer than the same time last year.

Holden's chairman and managing director, Denny Mooney, concedes the current climate doesn't help the launch of a big car.

"I'd rather be launching a full-size, comfortable product like this in an environment with lower petrol prices and oil prices. On the other hand, the more I've driven the car, the more confident I am in the vehicle that it delivers everything that we wanted it to deliver."

That, Mr Mooney suggests, is a car that taps into local buyers' traditional tastes.

"There's still a pretty healthy group of customers out there who want a fuller-size vehicle that's comfortable to drive, that meets all their requirements from a performance and safety standpoint.

"Sure, would I rather have a different kind of environment - yes - but on the other hand I'm still confident in the product, and I'm confident there's still a pretty healthy market out there for this kind of car."

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[Media!]

The sad part is GM left the current model to dwindle on lots for 9 years

Let's hope they don't make that mistake again and them maybe toyota won't be the top car seller in Australia, but quite a decent margin this year too.

[GMFAN85]

I doubt that will happen now that GM has a renewed interest in RWD sedans for it's North American market. With that, more capital will be pumped into the Zeta program, not just for the North American models but for all vehicles riding on that platform and therefore, model cycles will probably be much shorter.

You can thank Lutz for this.

[Odin]

Oh Yeah I forgot the Commodore has been the Best selling large car for the last 9 years. Yeah holden were so stupid, doing that, didn't change anything on the car at all .....

[GotAWD]

it may have not changed much over 9 years. but at least you guys still have some RWD V-8 cars to drive. not to forget the v-8 super car challange that speed TV airs sometimes. i wish nascar was more like that. real production based cars.

[Media!]

Originally Posted by Odin

Oh Yeah I forgot the Commodore has been the Best selling large car for the last 9 years. Yeah holden were so stupid, doing that, didn't change anything on the car at all .....

It is stupid of them, even if the sales success continued, first of as you can see a majority went to fleets, which means limited profits. Also during that time toyota swooped in and stole the market, i don't get why people defend a companies stupidity even if you like them. If you really wish the best for gm, like myself, you wouldn't defend 9 year product cycles as all it would do is eventually bite gm in the ass

[Media!]

Originally Posted by GMFAN85

I doubt that will happen now that GM has a renewed interest in RWD sedans for it's North American market. With that, more capital will be pumped into the Zeta program, not just for the North American models but for all vehicles riding on that platform and therefore, model cycles will probably be much shorter.

You can thank Lutz for this.

True, i didn't think about how North America will get the RWD platform also, so the product cycles should obviously speed up with the extra investment and how much is riding on its success.

[mikmak]

Its bit of a backhanded argument. If fleets buy commodores in bulk, then they will flood the market with second hand commodores and reduce the resale value. The removal of the commodore from the Taxi fleet is all holden can really do. If fleets don't buy commodores then resale will be strong.

[j_granlund]

Originally Posted by GotAWD

it may have not changed much over 9 years. but at least you guys still have some RWD V-8 cars to drive. not to forget the v-8 super car challange that speed TV airs sometimes. i wish nascar was more like that. real production based cars.

i wish that too,but it will never be back to the way it was in the late '40's to somewhere in the '70's.

[mikmak]

Originally Posted by Media!

It is stupid of them, even if the sales success continued, first of as you can see a majority went to fleets, which means limited profits. Also during that time toyota swopped in and stole the market, i don't get why people defend a companies stupidity even if you like them. If you really wish the best for gm, like myself, you wouldn't defend 9 year product cycles as all it would do is eventually bite gm in the ass

Odin was defending Holden not GM. Holden had to fund most of its own research until GMNA realised the success it was having over here. Blame home base for the product cycle. Holden did the best with what it could afford. And as stated, the best selling australian car well into its long life.

[Ty_99]

Yet most of us North American's are still jealous you all down under have got to enjoy these awesome RWD v8 cars, that we could only get if we decided to get a from the 80's or earlier (with th few exceptions in the 90's and 00's) Needless to say this car is very important to GM on both sides of the Pacific.

[63GrandSport001]

If I remember right Ford put 1 billion into the new F series pick-up truck, that was looked at as being a big amount of money and is considered to be a big reason as to why they are abole to sell 900,000 of them each year.

GM has invested 1 billion into the VE which is a large amount of money for just one car esp. considering the volume of it being what 50,000-100,000 units a year in Aussie land.

But GM spent so much money on the new one because the platform that it sits on is going to under pin alot more vehicles. Not to mention exports of this car will likely be much higher, so we can expect to see possibly as much as 1 million Zeta platformed vehicles sold each year around the world (500,000+ of them in the US). I think that this is GMs new strat. which will give them huge success because its rare for a auto maker to spend a billion dollars to deveope a single product. If I remember right GM spent some $200,000,000 to bring the Sosltice to life, and if they sell 30,000 units a year at a average transaction price of $23,000 then thats 690 million a year(GM doesnt see all of that as the dealers get a part of it). A drop in the bucket for GM but still considerable, if they sell a million Zeta's a year at a average transaction price of $26,000 then that is 26 billion a year, I think this is why GM spent so much money on developing the car because of the great potential this car will have to make them a lot of money.

[salbracht]

Originally Posted by JoeT

...
However, it may all be in vain as the people who will judge whether the $1 billion Commodore is a success - fleet customers, both business and government - buy about 80 per cent of all Commodores and they've already seen and driven the car.
...

80 PERCENT FLEET SALES!!!?!!??? Wow! I would say the closest we have to that here in the states is the Crown Victoria.

Too bad. I always felt that fleet sales caused vehicles to loose a little bit of their exclusivity.

[BBDOS CV8]

The 80 percent fleet sales thing is misleading: in Australia many people are able to salary-sacrifice i.e. convert the salary taxed at higher rates of personal income into a private lease in pre-tax $$$. Similar in some respects to Smartbuy. So while your Avis, Herz etc are big buyers of Commodores and Falcons, they represent only a few percent of sales. Same with large businesses - Telcos and office machine companies. Aussie RWD cars stand up to high mileages very well and are comfortable with large capacity and what kills things like Camrys and Magnas for longterm running costs is front tyre wear and servicing FWDs is dearer, as are parts usually.

Cars like the SV6 Commodore


and XR6 Falcon


are cars packaged and aimed at fleet buyers, who want a bit of sportiness - they are not boring beige rentacars, but have alloys with sticky rubber, sports suspension, better interiors and gauges and nicer body kits. Often the company you worked for could offset the Goods and Services Tax associated with the car and it's costs against the GST it owed the government from conducting it's business, which was win-win for everyone and made the lease deal unbeatable vs. buying a car with finance. Plus you just turned over your car every two years for a new one without shelling out reams of money. All your petrol, insurance, running costs were bulkbuy fleet, too.

A whole leasing industry has sprung up around brokering lease deals for the total car cost and subcontracting to companies so they just deduct money from salaries direct.

RRP on these cars is north of $US25,000 which puts them out of reach of the first time carbuyer who tends to choose cheaper stuff - or buy s/h ex-fleet. They are popluar as they look very similar and come in the same 'hero' colours as the '8's. There are so many of them being auctioned at 2 y.o. and 20,000miles up it has flooded the market, forced prices down and turned it into a buyers market. That means the fleetdeals for these cars have got pricier due to the lower resale for the leasing cos. Two years ago when the VZ SV6 was released you could lease one for about $13000 p.a. from my then employer - now the same car is $16,000 for a full lease.

Holden has two weapons in it's arsenal to combat this:

1. It sells about 30,000 of the old cars a year to the M-E. With the new, hyper-stylish Caprice and larger better-equipped Commodore that number could balloon - and the Arab world, with long flat roads and hot conditions love Commodores and Caprices which are engineered for the same stuff.
2. These cars have been designed and built to be sold anywhere on the planet without modification. They are Euro III compliant and unlike the Monaro and Caprice which Opel had expressed interest in are homologated for European registration.

I believe Vauxhall is itching to get their hands on HSV VEs in bigger numbers than Monaros which wil have more than 400hp along with six-speed tiptronic trans, and there is a strong possibility the WM will also be badged as a high-end Opel, where it will be very competitive with limo Benzes and Mercs, because it is much bigger, roomier and yet should slaughter them for running costs. DoD had been confirmed for VE, too.

So while Holden sales in Oz may not ever be like VT sales unless petrol prices recover swiftly, Holdens are likely to be sold increasingly o/s.

[Rick_VT]

isnt it funny for so long holden got there cars from older Opel cars now there about to send them back again, just goes to show how smart a small company can be when u dont have alot of money to send, bet GM in NA wish they could do cars for the cost that we can design them