Sales of Australia’s top selling car, the Holden Commodore, soared to
a new monthly record during May, writes Mike Duffy.

Once again Holden, General Motors’ Down Under subsidiary, ran out the
convincing market leader and increased its lead over second placed Toyota.

Holden’s share of the passenger market climbed to 28.9 percent –
its best result for 28 years.

The car maker for which everything is turning into gold, is now 11,999 units
ahead of Toyota and 22,943 in front of one-time arch-rival Ford.

It now appears a formality for Holden to win back the market leadership wrested
away by Toyota last year and to once again have Australia’s best selling
car in its stable.

With
Holden’s exports growing as rapidly as domestic sales, the industry is increasingly
concerned that the GM operation’s growing dominance could endanger at least
one of its competitors.

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Should another manufacturer (Ford, Toyota or Mitsubishi) pull out of building
cars in Australia, then Holden could incur higher production costs due to suppliers
becoming less competitive due to reduced OEM volumes.

Component manufacturers are already complaining of narrow margins from sales
to just four local car makers. Should one of those take a dive (as Nissan did
in the early 1990s) the effect would be profound.

Those remaining would be forced to pay more for their bought-in items, surrendering
any cost competitiveness of building cars locally.

Even Holden, which is basking in its own glory, is expressing guarded concern
about likely outcomes.

Of course, Holden wants to lead the market. But it wants the market to remain
sufficiently robust to sustain the second and third tier suppliers – otherwise
cost reduction strategies will be unattainable.

Just look at the sales performance of Holden and Ford, once neck-and-neck.

A
total of 7874 Commodores were retailed during May taking the year-to-date tally
for the Holden’s breadwinner to 34,138 units.

This compared with 4,055 Falcon sales in May for a five month total of 19,471
– a massive 14,667 behind the Holden it once rivalled head-on.

Holden finished May with a 23.6 percent hold on the market leaving Toyota in
its wake on 17 percent.

Ford was a struggling fourth on 13.6 percent and Mitsubishi Motors, another
company battling for survival, limped in with a disappointing 7.9 percent share.

Everything points to a record year for the Australian car industry. As a result
of good, reliable trend figures, the industry believes that even the revised
market expectation of 800,000 cars and commercials, issued by the Federal Chamber
of Automotive Industries, could end up on the conservative side.

As of this moment Holden is holding all the aces. As well as strong domestic
sales, its exports are growing rapidly and the company is on track to sell half
of its production overseas.

So why should anyone be worried about competing in a bullish market?

Quite simply, as Holden grows its sales at home and abroad, it is amassing
a considerable war chest for reinvestment and promotion of its growing menu
of products.

Ford,
Toyota and Mitsubishi have no such riches from which to draw. All have to be
that much more conservative in their selection of product from overseas affiliates
which often costs them dearly.

The likely result: Holden will continue to prosper and the other three manufacturers
will face a growing struggle to challenge The General’s powerhouse strength.

Industry analysts believe the Government strategy to allow full Goods and Services
Tax input credits for business buyers now instead of July 1, 2002 will bring
fleet buyers back into the market and result in a new record for the industry.

The total market was up 3.2 percent on the first five months of 2000 -a
healthy 9346 boost in sales to 301,519 vehicles.

True, month-on-month comparisons this year tend to show a false picture due
to the buyer’s strike leading up to cheaper car prices on July 1 under
the GST.

But maximum input credits are expected to see fleet and business buyers return
in force in the second half of the year.

National accounts released today show Australian economic growth of 1.1 percent
for the March quarter – well above market estimates of 0.5 percent.

The outcome was a handsome turnaround from the 0.6 percent contraction for
the December quarter – the first negative growth figure for a decade.

Had the March quarter ended in the red, Australia would have been plunged into
technical recession – and the car buying public would have gone for a long
sit on the sidelines.

As
it is, buyer confidence is high and the industry can look forward to a big June-December
period.

But there remains a nagging worry about one car maker making huge profits and
gains both at home and abroad while at least two of the other three are struggling
for survival.

As if to rub salt into open wounds, following the release of its latest sales
conquests, Holden staged a very public in-house celebration to mark production
of the six millionth car to roll off its Aussie assembly lines since the modest
beginnings of 1948.

The
top 10 car companies in May:

Author Mike Duffy is motoring editor of The Advertiser
and the Sunday Mail, Adelaide, South Australia.

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