It seems something of a formality that the two revised long wheelbase limousines GM’s Australian affiliate Holden has released on the domestic market will expand dramatically the company’s already impressive export revenue, writes Mike Duffy.
Holden is looking to gatecrash the potentially vast markets of China and South Korea with the Statesman and Caprice cars which are growing in popularity throughout the Middle East. The carmaker is moving to 24 hour production mid-year to keep pace with overseas sales which will blossom later this year when the Monaro coupe, modified, beefed up and wearing Pontiac GTO muscle car badging will be shipped to the United States at an annual rate of 18,000 units.
The deal was the brainchild of GM’s global product chief Bob Lutz who visited Holden, drove the car and flew back to America to broker a deal with Pontiac and the all-powerful auto unions. Lutz just loves Holden cars, mainly because they are gutsy rear-drive machines with optional 5.7-litre V8 which, he says, are made by car buffs for car buffs.
Even though the off-shoot has invested almost $A1 billion in its assembly facility and a new V6 engine plant in recent times, Lutz says “they do it without spending much money” and are a standout GM subsidiary, meeting budget on return on investment.
Holden looking for 100,000 units per annum exports
Holden chairman and managing director Peter Hanenberger, the former handling technician who rose to become a global businessman, also has a passion for fast cars and, like the 71 year old Lutz, drives them like he stole them. He is striving to build cars that handle and steer like German cars – and believes he can build 200,000 cars a year at Elizabeth by 2008 and sell half of them on export markets.
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By GlobalDataWith the war in Iraq essentially over, Hanenberger is looking to do business with the oil-rich country. As a member of the ‘Coalition of the Willing’, Australia is entitled to the spoils of war. And as the country’s biggest carmaker, Holden clearly will get a favourable position at the bargaining table. And so the apple of GM’s eye is well on the way to meeting its next target to earn $A2.5 billion in annual export revenue by 2005, and cement its position as a key global manufacturing base for the world’s biggest car maker.
Ford has released early images of its Fairlane and LTD limousines due for release on the Aussie market on July 1, no doubt in an attempt to frustrate Holden’s early sales of Statesman and Caprice. However, Holden sells only 5,000 examples of its long wheelbase cars on home soil with the real volume going overseas. So while Fairlane boasts smart, large car architecture – not unlike the Statesman – Holden has higher stakes in mind than purely a domestic scrap.
Things are less upbeat at Mitsubishi
While the people at Holden have good reason to be bullish about a future which seems destined for orderly growth and prosperity, the same cannot be said for Mitsubishi Motors Australia Ltd (MMAL) – on the other side of the South Australian city of Adelaide.
Mitsubishi allowed its 2003 revamp of its ageing Magna to be revealed at the New York Motor Show in Diamante guise because Mitsubishi Motors North America is its biggest overseas customer. The car is nothing more than the current model with a facial by Mitsubishi’s new global design chief, Frenchman and former DaimlerChrysler stylist Olivier Boulay.
An all-new Boulay-designed Magna replacement is due out in 2005 and a long wheelbase version a year later – the two cars bankrolled by $A900 million re-investment by MMC of Japan. The decision to back its Australian subsidiary was made a year ago with much fanfare to end long-standing talk that Mitsubishi was an odds-on candidate for closure.
The decision to flag the all-new model three years out was a calculated one by Rolf Eckrodt, the DaimlerChrysler exec who has saved MMC following the great product recall scandal which rocked the Japanese car industry and cost the car maker dearly. The decision to “buy” a certain future with a pledge of massive growth was a sound one, but the downside of playing with an open deck is coming back to haunt the house.
Potential buyers who were staying away from Magna because of its chance of becoming an orphan if its local maker packed its bags and went home to Japan are now loathe to buy the car because they know it will be superceded in two years time.
To compound MMAL’s problems is the fact that while the public has seen only images of the car which will be the 2003 Magna come mid year, there has not been an overwhelming vote of approval from the buying public. Far from it. Newspapers have started publishing letters voicing disapproval of the new, distinctive pointed shape – months before it hits showrooms. And that does not bode well for the company which is looking for a surge in domestic sales and export successes, particularly the Middle East.
MMAL is yet to reveal its financials for 2003 and the figure will be distorted by the switch from calendar year to Japanese fiscal year – a move which will make the period under report 15 months and impossible to line up with the previous year. The carmaker sold a meager 21,258 Magnas and 2,147 higher priced Veradas last year. When totaled with CBUs from Japan, Mitsubishi’s tally was still a lowly 67,396 units which claimed 8.2 per cent of the Australian market.
MMAL will book a profit, but at best around $A20 million – roughly the same as last year. The Australian subsidiary beat Holden and Ford to market with a low ride-height all-wheel drive version of the Magna late last year, but a combination of tired body styling and a delay in getting the car to market has not ramped up sales to a level which had been hoped. Similarly, a Ralliart version of the Magna, the most powerful car in the stable, has been a sales flop and is being sold off only with the help of a $A5000 discount price attack.
MMAL president Tom Phillips appears to be marking time until the 2003 car comes along before all-out promotion of the all-wheel drive and Ralliart Magna. While Hanenberger is an engineer-turned-businessman who is a car builder who can spot a niche model from 50 paces, Phillips’ strength lies in marketing.
He believes in the 2003 Boulay design and has the ability to get dealers to follow him into battle. The degree of success of the 2003 makeover car is not a pointer to the long-term viability of MMAL. It will be the return the company can give MMC on its $A900 million investment that will provide the ultimate pointer.
The car has to sell the place down in Australia and break into many new markets overseas. Failure to do both will have the hounds howling at the factory gates.
Toyota leaves the others behind in its wake
While Holden and Mitsubishi are looking off-shore for their future and Ford is enjoying a return to respectability with its new BA Falcon, Toyota is quietly leaving all three in its wake. Toyota is leading the Australian market following a blitzing first quarter and with the help of a good-looking, well-designed new Camry no doubt will be selling international telephone number of Aussie product overseas, mainly in the Middle East.
Domestic market prospects looking good
The Federal Chamber of Automotive Industries is forecasting another record market of 825,000 vehicles this year. Holden believes this could be an under-estimate. It says if the first quarter – traditionally the lowest because of quiet January and February sales – continues, 880,000 could be sold by year’s end.
A traffic jam of new vehicles will be released progressively during the year with Holden leading the way with a model-a-month. A dynamic marketplace indeed. But one with more questions than answers at this point in time.
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The Ford Fairlane |
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The Mitsubishi Magna |
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