Comment: Holden a victim of its own success

TOBY HAGON
Last updated 05:00 12/12/2013

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OPINION: It was a little over a decade ago Holden was boldly talking about commanding a 25 per cent share of the Australian market.

The brand was on a high, having just re-introduced the Monaro two-door and posting record sales of its Commodore large car. There were even valuable export programs to the Middle East and United States.

The Australian government barely blinked at the hundreds of millions of taxpayer dollars used to offset the billion-dollar plus investments in new models and plants. After all, the industry was on the up.

Fast forward to 2013 and it's a very different story: the Holden lustre has well and truly dulled.

That bolshy market share figure never materialised, instead peaking at 21.6 per cent in 2003 before sliding to the record low of less than 10 per cent that it's currently hovering at.

That domination was built around the Commodore, which at times accounted for more than one in 10 new-vehicle sales and more than half of Holden's market-leading volume.

It also came at a time when Ford was struggling with a seriously unloved Falcon, while Toyota and Mitsubishi - the only two local car makers in the late 1990s - were insignificant when it came to the large family cars Australians once parked in their driveways.

At the time Holden admitted there was an unwarranted arrogance internally as a result of the huge large car share.

These days the Commodore - which topped the sales charts for 15 years up until 2010 - can struggle to make it into the list of top 10 sellers.

Even with a recent model update that's seen sales recover it's outsold by imported small cars and utes.

There's little doubt the market has shifted away from large cars - the staple of the Australian car industry.

And the patriotism that once flowed into Holden dealers has made way for slick smartphones and cheap holidays.

It's easy to pick over the bones now and dissect where it went wrong. Holden, as with Ford, was slow to respond to demands for more fuel efficient vehicles.

The company was heavily focused on keeping fleets and governments flush with cheap company cars.

But the biggest issue Australian car makers faced was a huge increase in competition brought about by an unexpectedly high Australian dollar, which not only made imports cheaper (something multiplied by record low tariffs) but exports less viable, all the while increasing the cost of producing cars.

It's worth noting that in 2003 when Holden committed more than $1 billion to its VE Commodore program large car sales were booming.

Governments and fleets couldn't get enough of them and families were still lapping them up on the second-hand market as the chariot of choice.

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By the time the VE went on sale in 2006 the rot had set in and large car sales were on a long slide, with SUVs fast replacing the big six-cylinder in driveways from Melbourne to Maroochydore.

Considering Australian car makers traditionally stretch a model lifecycle for a decade or more to account for relatively low volumes, Holden had little choice but to do what it could to contain the sales slide.

-Fairfax News Australia

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