Holden Australia Health Check 2015
Holden has lost the plot in Australia. It's off its meds, having a complete psychotic break, and on the fast track to a rubber room. Holden has become a national basket case.
And the situation is about to get a lot worse.
If Holden’s super-secret corporate objective is to turn a former national Australian icon, built up over decades, into a busted-arse, third-rate South Korean import operation - love that kimchee - then Holden is about to kick the biggest goal in Australia.
HOLDEN: THE FORMER ICON
Twenty-first Century Holden is not the Holden you grew up lusting after. Forget the Chevy-engined Monaros, the L34 Toranas, and the two-door HQs.
The last time Holden dropped any kind of emblematic icon bomb was 17 years ago. Sydney Motor Show, 1988. Media preview day. The covers came off a top-secret two-door VT Holden Commodore prototype that would in time become the third-generation Holden Monaro - resurrected after two decades in the dirt. There was stunned silence. I still remember it. Doesn’t happen very often. That was the last time Holden meant anything to Australians.
After that, it’s like watching a crash test at 1000 frames a second. You could cram a whole bunch of automotive MBA students in an ampitheatre, and show them the past 12 years of Holden history. Two simple instructions:
- Study this closely.
- Don’t do that.
That’s pretty much all it takes to succeed as a carmaker.
HOLDEN: THE WASTED $2.2 BILLION
Those unprincipled bastards hiding behind the Holden red lion Hoovered up an average of $180 million dollars a year from the Australian taxpayer - every year, for the past 12 years. That money - $2.2 billion - could have built hospitals, schools, roads. It could have cemented our national food/and or energy security strategies. Who knows what else? Instead, the taxpayer got nothing more than a money-for-jobs protection racket, with GM in Detroit pulling the strings of industry ministers on both sides of Australian politics.
(When organised crime takes money from a strip club owner in exchange for keeping the doors open, that’s called extortion. When General Motors does it to the Australian taxpayer, they call it ‘co-investment’. Arseholes.)
For $2.2 billion dollars, Holden managed to luxuriate through a cascade of the worst product planning decisions of all time. The Holden Cruze and Holden Captiva are gold medal-winning shitboxes, and the Holden Commodore's an irrelevant joke.
HOLDEN: THE FAILURE TO PICK THE TRENDS
Back in 2008, about the same time as the global financial crisis, I asked Mark Reuss, who was Holden boss at the time - face-to-face - about the relevance of large cars like the Holden Commodore in Australia, into the future. Because everyone else was downsizing and going green. He told me unequivocally that bigger was better, and thus would it ever be.
Since then, of course, Holden Commodore sales have marched in lockstep off a cliff - but only from 51,000 that year to 30,000 last year. What’s 21,000 Commodores between friends? (Answer: Forty per cent.) Jam them all nose to tail in a conga line - they would stretch 100 kilometres. Holden's Mr Reuss certainly had an uncanny ability to put his finger right on the pulse of the market.
As it happens, being crazy-savvy like that is more than sufficient to climb the corporate ladder at GM. The job Mr Reuss enjoys today is President of GM North America. I wonder how he’s going, playing the market Stradivarius over there? The degree to which Mr Reuss and others failed fundamentally to understand the Australian market is breathtaking. I can't decide if it was hubris, or arrogance or both. And look where we are today:
HOLDEN: ON THE BRINK OF DEATH
The local factory is on the fast track to the crematorium. The furnace doors have opened, and without further taxpayer support, there is speculation we’ll have to slide the coffin in early.
(Would you like some ‘co-investment’ with that?)
Ultimately, beyond 2017, and maybe earlier, Holden will become Australia’s third major South Korean importer - the low-rent one without the big warranty or the increasingly high quality product, problematically.
The former Daewoo factory in South Korea, where most Australian Holdens are made, was so on the nose they had to change its name … it was probably easier than instituting the fundamental engineering reforms required to turn the product around.
I wish I’d had the balls to ask Mr Reuss to speculate about if and when Hyundai would overtake Holden in sales - because I would have liked to quote him on that now. It’s gunna happen this year. Holden will fumble the ball - again, and again, and again - and Hyundai will overtake, and step up onto the podium. You can take that to the bank.
HOLDEN: WHICH NEW BOSS IS IT TODAY?
Today, Holden can’t even retain a managing director for a respectable period - they’ve had five big cheeses in six years. And all the last one did, allegedly, was get the dealer network offside in record time - and tell the press he thought Holden would overtake Toyota by 2020. Just incredible.
(The back story here is: Holden’s got a PR department you can see from space. It’s got its own postcode. You’d think one person in that department would be smart enough and/or empowered enough to say words to the effect of: “Mate, I can see your finger. It’s hovering over the self-destruct button. You know we’re bleeding all over the floor here, right? Do you really think this is the time for internal conflict and bold predictions about dominating the market? Or do you think, perhaps, and it’s just a suggestion, being devil’s advocate, just a touch of humility might be in order?)
Being boss of Holden is one of the cushy-est jobs in the GM universe. Frankly, it's one of the cushy-est jobs in the universe. (It’s like being an ex-prime minister: I’ll take it.) The job interview, back in Detroit, is like: "Mate - we think you’ve got potential. We’re going to send you to this little place called Australia. No; Australia. No, it's nowhere near Germany. It’s in the southern hemisphere. They’ve got beaches, and their politicians are all gummy bears. If you don’t bugger it up too badly, then you can come back to Detroit, soon, and we’ll give you a real job. How’s that sound? Great. Enjoy."
HOLDEN: THE NEW GUY
That Holden boss hiring policy has worked out predictably. The latest Holden Chairman and MD is a guy named Mark Bernhard. And he’s a bit too busy right now doing high-level stuff in China to kick off at Holden - for the next few months.
It’s not as if there’s any real urgency. Total Holden sales have only crashed another 10 per cent so far this year. From 2010 to 2014 they only crashed 20 per cent. Holden Commodore is parked in the deep-ocean outfall, so that’s okay. And Holden is still setting new records - namely for safety related recalls, and low deliveries of local product. Is it any wonder Holden’s market share has plunged 26 per cent in five years?
So: No hurry, Mark. The house is on fire, but it’ll be OK. See you when you get here. (Do you happen to know the number for the fire department? We can't find it anywhere.) And don’t bother unpacking - you could be leaving any time.
Mr Bernhard is a beancounter by profession. He’s got a degree in beancounteroloy from Monash University, and an MBA from Deakin. So it’s not looking good, in my opinion. I think we better keep him away from the tools, because beancounters never get cars. That’s a problem if ‘cars’ is what you make. Correction: Import. What you import.
That's an important correction, because Mr Bernhard will be closing the factory in due course, if he lasts that long, and consequentially boning the workers. Perversely, in an official statement he describes the appointment as his, quote, “dream job”. Sounds like a nightmare to me.
HOLDEN: THE OBVIOUS COMPARISON
Here's the one thing I don't get: Let’s take two US-based companies operating Down Under: Holden and McDonald’s. McDonald’s has a broad manufacturing base here, in the food sector. The company directly employs thousands of Australians, and thousands more indirectly owe their livelihoods to Mickey D’s - they might be contract gardeners, cleaners, electricians, builders, cooking equipment manufacturers - whatever. And let’s not forget farmers - because the cows for the two all-beef patties, the wheat for the sesame seed buns, and of course the sesame seeds themselves, plus the lettuce, the cheese, the onions, and the Christ knows what that comprises the special sauce - it all has to be produced somewhere.
Macca’s is monumentally successful because it understands the market and reacts to it. And my understanding is: Macca’s doesn’t get one red cent worth of taxpayer subsidy to keep its decentralised factory doors open. McDonald’s is the opposite of Holden. The anti-Holden. The null-Holden. Whatever you might think of the food, you can’t argue with the business model. Macca’s kicks goals. Employs untold Aussies. And doesn’t extort the taxpayer.
Despite this tsunami of economic fundamentals, Holden is still - in some minds at least - Australia’s own, put up on a pedestal, idolised, while McDonald’s is popularly reviled. It’s cool to hate the golden arches. That hardly seems fair.
I'm interested to know your view. Leave a comment below, to let me know what you think.