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Holden moves to reinvent the wheels as a lifestyle brand

Mark Hawthorne

For Australia's car makers, it started with a bang, and is ending with a whimper.

The bang came in 2013, just days before Christmas, when then Treasurer Joe Hockey and acting PM Warren Truss famously stood up in parliament and goaded Holden into leaving the country. In a calculated performance - one seemingly designed to both flush out GM's intentions and back the car maker into a corner - the Treasurer said it was time for Holden to "come clean" and be "fair dinkum" with the Australian people over its future in the country.

"Either you're here or you're not," bellowed the nation's treasurer in a nationally televised performance.

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History of Holden

Football, meat pies, kangaroos and... Holden's decision to cease local production will mean the end of an icon.

Mr Truss chimed in by saying "they owe it to the workers of General Motors not to go into the Christmas period without making a clear commitment to manufacturing in this country".

GM was stunned. "Are you seeing this question time attack on Holden?" read one text message, sent by a company insider. "Taunting [Holden] to leave. It's extraordinary."

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The response was quick. Within hours, local boss Mike Devereux had spoken with his masters in Detroit, and the die was cast. Holden's local manufacturing business was gone. Soon after the phone call to Detroit, Mr Devereux booked a flight to Adelaide.

"I wanted to tell my workers first," he said.

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Almost three years on from that drama, it's hard to believe the end is nigh. Before this Christmas arrives, Holden's engine plant in Port Melbourne will have ground to a halt. The Holden Cruze production line in Adelaide was shut down in July. It's now only a month until the last locally made Falcon rolls off Ford's Broadmeadows production line.

The Falcon, like the rival Kingswood and Commodore, has been a cultural icon for Australians. But Bluescope last month announced it had delivered its very last batch of Australian steel to Ford. The end of the line for Australia's longest running locally built nameplate is here.

Illustration: Simon Bosch
Illustration: Simon Bosch 

The damage to the wider economy will be far-reaching.

The Federation of Automotive Products Manufacturers estimates the automotive industry generates 6.5 jobs in associated supply and consumer industries for every one automotive job.

This is where the job loss estimates from the closures of Ford, Holden and Toyota's factories become murky, because calculations can deliver myriad results, depending on how far and wide one expands out into the supply chain.

University of Adelaide researchers Lance Worrall and John Spoehr​, for example, estimate the closures will trigger a net loss of just under 200,000 jobs, with about $29 billion wiped off Australia's gross domestic product.

Despite the closures, the silence about the end of local manufacturing has been palpable, not only from the companies, but from governments at state and federal level. Before we know it, Australia's a much-loved car making industry will be gone.

End of the line 

Holden managing director Mark Bernhard.

Holden managing director Mark Bernhard. Photo: Jesse Marlow

Back in 2013, while all the drama was taking place in Canberra, Mark Bernhard was happily working on GM's expansion plans in China. The Melbourne born and raised accountant, and self-described "finance guy", was GM's chief financial officer in China when he was tapped and offered his dream job, managing director of Holden in his home town.

The company is very different to the one Bernhard first joined in 1986. Back then, it was reeling from almost $500 million of losses accrued from its failed Camira small-car project, but a golden era was just over the horizon.

"I first joined Holden 30 years ago," Bernhard told BusinessDay. "I have pretty much seen it all in my time here."

What Bernhard did see was the glory days. By the time the 1990s arrived, Holden dominated the Australian automotive landscape. In 1991, one in five cars sold in Australia was adorned with a Holden badge. That market share rose to 28.2 percent by 1999, better than one in four cars sold.

In our lounge rooms, Holden's TV ads reminded us that being Australian meant "football, meat pies, kangaroos and Holden cars", even if the jingle was rebadged from America. The original version, penned by a Madison Avenue ad agency, went "baseball, hot dogs, apple pie and Chevrolet".

Success came easy, from the racetrack - where the Commodore scored six wins at Bathurst during the decade - to the showrooms.

The history books show the peak came in 2002, the year Holden sold almost 180,000 vehicles in Australia. "I remember the days when we could release a new Commodore and sell 100,000 cars a year without even trying," Bernhard said. "Now the biggest selling car in Australia sells only 40,000 a year. The market has splintered and stratified, that's our reality." 

It's a pain all the local manufacturers have felt. In the mid-1990s, Ford sold more than 220 Falcon sedans a day. Now it struggles to sell more than a few hundred in a month.  

VFACTS industry figures for 2015 show Ford posted its worst result in 49 years — since way back in 1966, when decimal currency was introduced — while Holden's annual sales slumped to the company's lowest in more than two decades.

There was a time in Australia when the choice of family car was pretty much came down to Ford or Holden, unless you had the cash to buy and run an expensive European car. Even the arrival of the Japanese car makers, led by Toyota, left Holden and Ford in strong positions.

But the world has changed. Cheaper imports, especially from luxury car importers, have compounded the woes. According to the latest VFACTS sales data, Australians have bought more German cars (51,376) than locally made cars (47,608) this year.

 

If the trend continues, 2016 will mark the first time that German cars outsell their Australian counterparts.

Last year Australians bought 102,951 Holdens, less than half of Toyota's 206,236 cars for the year. This year they will slip under the six-figure mark for the first time in decades.

Strip out 29,000 sales of the locally made Commodore and Caprice and Holden's numbers are even more dire.

Falling behind 

Bernhard believes Holden still has a major advantage over its rivals.

Bernhard believes Holden still has a major advantage over its rivals.

To put it in perspective, Ford and Holden were the only two among the Top 10 brands to suffer a fall in sales in 2015. Holden, down by 2.9 per cent, was fewer than 1000 sales away from being overtaken by Hyundai.

"It's a fact that Holden hasn't kept pace with what our customers or consumers want," Bernhard said. "But the good news for the company, for the staff, is that we know we make money as an importer. And we did that with one of the oldest portfolios of cars in the country. By this time next year, we will have one of the newest portfolios of cars in the country. We will have the pick of GM's best products from around the world. The change is compelling."  

It's against that backdrop that Bernhard has returned home to try and turn around Holden's fortunes. He is adamant he isn't just coming home to oversee the closure of Holden's production facilities, and finalise the sale of its significant property holdings in Port Melbourne, which will net GM in excess of $100 million.

His key job is to rebuild the once famous Lion badge, and convince Australians that a foreign Holden, rather than one built in Adelaide, is worth buying. To that end, Holden this week embarked on one of the biggest rebranding exercises the country has seen.

"This is more than just a brand relaunch," Bernhard said. "This is a complete company transformation, from a local car manufacturer to an importer. The decision to end local manufacturing has been and gone. It's a reality, and it's here now. We a re very proud of our heritage and will honour that heritage. We will keep racing and entering a team in Supercars, for example. But we need to change as a company. Our customers tells us that. Our dealers and partners tell us that."

Amid the gloom, Bernhard believes Holden still has a major advantage over its rivals. Holden's history doesn't just end when the factories grind to a halt next year. Holden still has a presence in Australia that is the envy of its rivals.

"It's not just our history and our heritage in this country," he said. "We are keeping our world-class design centre in Melbourne. We are keeping our proving ground at Lang Lang. We will have more than 300 designers and engineers here in Australia. It means the very best cars from GM's global portfolio can be adapted for our conditions."

But change for Holden has already arrived.

A new look 

New Holden brand ambassadors: surfer Nikki Van Dijk, chef Luke Nguyen, actress Claudia Karvan, actor Matt Le Nevez and Showpo founder Jane Lu.

New Holden brand ambassadors: surfer Nikki Van Dijk, chef Luke Nguyen, actress Claudia Karvan, actor Matt Le Nevez and Showpo founder Jane Lu.

Holden made an after-tax profit of $128.1 million last year, despite incurring losses from its local manufacturing business. "It's fair to say the importing business is subsidising the car-making business," said Bernhard. "But the good news for the company is that the importing business is profitable and sustainable, and we now have the line-up of cars to take us into the future."

Along with the Commodore, what will also go is what Bernhard admits is the company's "blokey" image. No more "football, meat pies, kangaroos and Holden cars", as the famous jingle went. New brand ambassadors include actress Claudia Karvan, chef Luke Nguyen and fashion entrepreneur Jane Lu.

Holden unveiled five new cars, a new badge and a new jingle, this time a pop song by internally renowned producer Flume, as part of the rebuild. The company is also offering customers 24-hour test drives, and capped price servicing for life, as it tries to change Toyota as the country's biggest car seller. But not all are completely convinced. "I always worry when companies try to 'clean up their act', so to speak," said veteran motoring journalist Will Hagon, who has just released a history of the company, Holden: Our Car 1856-2017.

"It's that old line, you don't know what you've got til it's gone. That's the way it will be with the Commodore and the Falcon. These are wonderful cars for Australian conditions, and we will miss them, for all their faults, when they have gone. If Holden is to succeed, it will have to deliver cars built for Australian conditions."

But for Bernhard, change is here. "No one will be able to call us the Commodore Car Company anymore," he said.  "I think it's fair to say we were guilty of not listening to our customers for a lot of years. We had the oldest portfolio of cars in the industry. We had the best selling car [the Commodore] in the smallest market segment [large passenger cars] and we are changing all of that." 

Holden hopes its new logo and font (top) will give the brand a facelift.

Holden hopes its new logo and font (top) will give the brand a facelift.

It's no accident that three of the cars Holden unveiled this week in Melbourne are SUVs. Australians now buy almost as many SUVs as passenger cars, and Holden has not been able to compete with Mazda, Toyota, Volkswagen and Audi in the market.

"We now have a range of SUVs that are all new product. We have the European car of the year in Astra."

Those new vehicles should keep Holden in the black, even with the massive marketing campaign it has undertaken, and the launch of five new cars in the next five months. "We actually plan to launch 24 new models by the end of 2020," says Bernhard. "Nowhere I have been have I seen such a fast renewal of the range."

One of those cars will be the new Commodore, which looks likely to be the European designed and made Opel Insignia. Despite the overtures from rivals such as BMW, Bernhard is also confident Holden will remain the key pursuit vehicle for the nation's police forces. A 300 kilowatt, all-wheel drive variant of the new Commodore could be developed for Australia's police forces. "We have the ability to tune and refine the cars for Australian conditions at Lang Lang," he said. "No other car company can tailor vehicles for the police like we can. Others have been making noises about getting the business. We don't need to make noises."

Except for maybe one – Holden's Lion roaring once again.

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