It’s the biggest gear shift in the history of Australia’s car industry, and Holden’s road from local manufacturer to full importer is proving to be not without its potholes.
Holden boss Mark Bernhard said there was “no sugar coating” the fact that Holden faced a tough transformation. The last Commodore rolls off a production line in October, and the latest accounts reveal the company would have lost $180 million making cars in Australia if it hadn’t announced the closure of its local manufacturing facilities.
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While Holden’s books show a paper profit of $125.5 million on local production, those figures include a $128.2 million payment from GM to help with restructuring costs, along with the $50 million from the federal government’s Automotive Transformation Scheme. Take those out, and local production was well and truly in the red, even before a potential $125 million depreciation hit was counted.
In the past two years, Holden has booked $600 million in one-off charges driven by wind-down costs associated with manufacturing. These include asset impairments and employee entitlements.
The last locally built cars roll off Holden assembly lines in October. Photo: Carla Gottgens
The good news is that Holden’s importing business is proving profitable, despite the fact the company’s market share has slipped to 8 per cent. Holden’s National Sales Company operation, which includes the sale of imported cars, netted $3.56 billion of revenue last year, for a net profit after-tax of $27.3 million.
“For the second consecutive year Holden has recorded a solid profit from our National Sales Company operations,” Mr Bernhard said. “This result highlights the strong profitability of our long-term business plans.”
Holden sales dipped below 100,000 cars for the first time in 26 years last year. The company sold 94,308 vehicles in 2016, down from 102,951 cars in 2015.
As recently as 15 years ago one in every five cars sold in Australia bore Holden’s famous Lion badge. It’s now fewer than one in 11.
Holden’s EH sedan in the 1960s was a less-than-stellar platform for racing.
“We’re facing challenges as a business and undergoing fundamental changes, there is no sugar coating that,” Mr Bernhard said. “But our consistent financial results highlight the underlying health of the business. Now we need to keep our unwavering focus on growing sales, re-building our brand and putting our customers first. If we look after the fundamentals of our business, the rest will take care of itself.”
Holden has sold it’s famous Port Melbourne factory and production facility for $130 million, but the company will retail a strong presence in Australia beyond the end of the year.
Then Prime Minister Ben Chifley with the Holden FX in 1948.
A corporate headquarters in Port Melbourne retains Holden’s international design studio, and an engineering and technical team. The Lang Lang Proving Ground will also continue to test vehicles.
Holden famously manufactured the first all-Australian car in 1948.