17 February 2020, Written by Matt Ogg

The brake lights are on for Holden in Australia and New Zealand after General Motors (NYSE: GM) announced the 160-year-old brand would be retired from sales with local design and engineering operations to cease by 2021.

GM's international operations senior vice president Julian Blissett says the difficult decision was made after considering numerous options to turn the iconic car brand's operations around.

"Through its proud 160-year history, Holden has not only made cars, it has been a powerful driver of the industrialisation and advancement of Australia and New Zealand," Blissett says.

"Over recent years, as the industry underwent significant change globally and locally, we implemented a number of alternative strategies to try to sustain and improve the business, together with the local team."

The vehicle manufacturer conducted a detailed analysis into the level of investment needed to make Holden competitive, with determining factors including the highly fragmented right-hand-drive markets, the economics to support growing the brand, and delivering an appropriate ROI.

"After comprehensive assessment, we regret that we could not prioritize the investment required for Holden to be successful for the long term in Australia and New Zealand, over all other considerations we have globally," says Blissett.

"This decision is based on global priorities and does not reflect the hard work, talent and professionalism of the Holden team."

The group now intends to further its specialty vehicles business in Australia and New Zealand instead.

GM Holden interim chairman and managing director Kristian Aquilina says given the significance of Holden through its history, it was critical the company worked with all stakeholders to deliver a dignified and respectful wind-down.

"Holden will always have a special place in the development of our countries. As Australia and New Zealand grew, Holden was a part of the engine room fuelling that development," says Aquilina.

"Today's announcement will be felt deeply by the many people who love Holdens, drive Holdens and feel connected to our company which has been with us for 160 years and is almost ubiquitous in our lives.

"Unfortunately, all the hard work and talent of the Holden family, the support of our parent company GM and the passion of our loyal supporters have not been enough to overcome our challenges.

"We understand the impact of this decision on our people, our customers, our dealers and our partners and will work closely with all stakeholders to deliver a dignified and respectful transition."

Warning signs for today's news came as recently as December last year when GM pulled the pin on the Holden Commodore's US counterpart the Buick Regal.

At the time the company reportedly claimed the model was here to stay, but shortly after it was announced the Holden Commodore would be pulled from showrooms by December 2020.

Once a subsidised industry, Australia's vehicle manufacturing sector struggled to stay competitive for a long time due to a combination of high production costs and a relatively small domestic market.

These challenges were exacerbated by a very high Australian dollar between 2010 and 2013, as well as political uncertainty around subsidies.

In late 2013 the company signalled it would finish production in Australia by 2017, which came to pass in October of that year when the closure of its Adelaide plant spelled the end of an industry as welll as around 1,600 jobs.

Australian Industry Group: "It was only a matter of time"

Australian Industry Group (Ai Group) chief executive Innes Willox says today's confirmation from GM is an "almost inevitable yet sad day for the industry", but new opportunities exist for manufacturers tied to electric and hydrogen vehicle sectors.

"Changes to the industry and consumer habits and the loss of full scale auto assembly in Australia meant it was only a matter of time before the local Holden marque became history," says Wilcox.

"The announcement that the design and engineering operations would likewise cease by 2021 is also disappointing, especially with the loss of jobs, skills and our capacity for research and development that this will entail.

"However, the automotive and components sector remains vibrant in Australia and there are opportunities in many areas including exports and design and in the new growth areas around electric and hydrogen vehicles, for example."

He adds the transport equipment manufacturing sector saw jobs grow over the past two years in particular due to success with the manufacture of trains, trams and trucks.

"In 2019 there were 80,000 Australians employed in the sector up from the 2017 low of 70,400," he says.

"The GM announcement that they will focus on growing their business in speciality vehicles may also open new opportunities for local manufacturers in this niche area."

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