First look at the 2018 Holden Commodore

First look at the 2018 Holden Commodore

HOLDEN is on the brink of its biggest upheaval since it announced it would stop making cars in Australia.

Opel, the German division of General Motors — which is supposed to supply one third of Holden’s future imported car line-up from next year — is a pen stroke away from being sold to French car maker Peugeot-Citroen.

The deal almost happened nine years ago in the grip of the Global Financial Crisis, but US giant General Motors decided to keep Opel at the eleventh hour.

However, since then, Opel has lost a staggering $9 billion and now GM wants out.

When fresh talks between GM and Peugeot-Citroen surfaced last week, analysts initially said the deal was a slim chance of going ahead, as it had fallen over before.

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However, reports out of Europe over the weekend claim a deal for Peugeot-Citroen to buy Opel could be signed as early as this Thursday for an estimated $2 billion.

If it goes ahead, Holden will initially continue to source the Opel Astra from the UK and the next generation Commodore (badged as an Opel Insignia in Germany) would still arrive as planned in March 2018, says Holden.

Peugeot-Citroen says it intends to keep Opel as a separate brand, in a deal that would see the three badges combined become the biggest automotive company in Europe after Volkswagen.

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However, the next generation of Opel cars Holden sources from 2025 onwards are likely to be radically different once Peugeot-Citroen starts to rationalise the model range to cut costs.

The biggest threat to Holden — if the Peugeot-Citroen deal goes ahead — is that it will lose its influence with key international decision makers, and eventually weaken the Holden line-up.

For example, Opel in Germany added a V6 to the imported 2018 Commodore purely at the request of Holden — but only after Detroit rubber-stamped millions of dollars in extra investment to make it happen.

The 2018 Commodore was only supposed to have four-cylinder engines, but Holden begged for a V6 to avoid a buyer backlash in Australia.

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Given Holden’s shrinking market share in a country that represents just 2 per cent of global car sales, Holden won’t have anywhere near as much leverage with Peugeot-Citroen to tailor cars to suit Australian conditions.

A statement from Holden said: “(General Motors) remains committed to the Holden brand in Australia and we don’t expect any changes to Holden’s vehicle portfolio. Right now we are focused on ramping up Astra volume and preparing to launch the fantastic next-generation Commodore in 2018”.

While it will be business as usual in Holden showrooms over the next few years, the outlook from the mid 2020s is unclear.

Peugeot and Citroen have demonstrated a remarkable lack of understanding of the highly competitive Australian market — even though Citroens have been sold here since 1923, almost three decades before Holden was established as a car manufacturer.

A Citroen was also the first car to complete a lap of Australia, in 1925, the same year Ford established manufacturing in Geelong.

Despite their early promise, both French brands have recorded comparatively minuscule sales through numerous independent Australian distributors over the decades.

The French deal would force Holden to rely more heavily on SUVs out of the US and South Korea and utes out of Thailand, accounting for two-thirds of the model range.

The uncertainty around Holden’s future European car line-up comes as its market share hit a record low in 2016 after posting the lowest sales in 23 years.

Why GM wants to sell Opel:

— Opel has lost $9 billion since the GFC.

— European car sales aren’t growing.

— Small cars are less profitable than SUVs and utes.

What does it mean for Holden:

— In the short term, Holden’s showroom won’t look any different.

— But Peugeot-Citroen will merge some Opel models with its own from the early to mid 2020s.

— Holden won’t have as much leverage when it comes to negotiating changes to its European Opel cars to suit Australian tastes.

What are the chances of the deal going ahead?

— Last week, analysts said the chances were slim.

— This deal fell over nine years ago, in the wake of the GFC.

— Now experts predict a deal could be signed this Thursday.

This reporter is on Twitter: @JoshuaDowling