After dropping the bombshell that GM
offered up its Australian Holden subsidiary during its discussions with PSA Groupe in Paris, it’s time to look at why, and what the benefits may have been, to
both parties.
First,
General Motors.
Despite what fiercely patriotic
Australians may think, the Holden company is no longer a big deal Down Under.
In reality, since the end of full vehicle manufacture, it’s an import company, and an aggregator of brands –nothing more.
In fact, it hardly needs someone with the
title of ‘Chairman’ to run it; and as it’s really nothing more than a vehicle
importer now, you could run it from rented office space in a city tower in
Melbourne with maybe 100 people, a bank of computers, phones and a great
Broadband connection. The ‘Holden’ company is worth little in capital terms.
GM's other operation is run separately from the ‘Holden’ company. The Design and
Development division, including the huge proving ground at Lang Lang, is run by GM Engineering in Detroit.
In blunt terms, this is not a huge
capital-intensive operation either. The real value here is represented by the
talented people who populate the Design and Development Centre.
Sure they have an expensive Cray Super
Computer, to allow real time connections to the design headquarters in
Michigan, but if GM wanted to save money, it could close this operation with a
stroke of the pen, sell Lang Lang to land developers, and ship the people who were
prepared to move to the USA to a nice residential development somewhere outside
Detroit.
General Motors simply does not need to
maintain a costly presence in Australia.
GM only agreed to retain the
Design and Development Centre, and Lang Lang, to keep the Federal and Victorian
state government; its dealers; its customers, and the community at large, happy
about the decision to shut down manufacturing and unemploy a lot of people.
Second, PSA Groupe.
Mary Barra probably said to Carlos
Tavares during the negotiations to sell GM’s European operations: “You know if
you think about the long term implications, taking on Holden as well, could be a
significantly valuable investment.”
Barra would have pointed out that PSA Groupe could keep the supply operation for Holden-badged cars going indefinitely
(after the German platforms have outrun their usefulness), and that the Holden business represents a lot of volume, from which PSA would retain the profit margins.
Then, it could use the established
administration operations in Australia for an Asia-Pacific base, given PSA’s
ambitions in China, and also to satisfy its big shareholder, Dongfeng. In a
secondary sense it could also use the admin operations to increase the number
of Peugeot and Citroen vehicles it sells in Australia and New Zealand, although
that volume, and even potential growth, doesn’t really amount to much.
Then there would be the remnants of the
Design and Development Centre (meaning, the people who don’t want to live in
the USA), and Lang Lang – which would be a huge benefit to a European car company that needs to maintain vehicle proving on a year-round basis, when a
blanket of snow settles over the Belchamp operation in the northern winter.
You see; the idea begins to make sense when
you explore all the possibilities.
Clearly, however, Carlos Tavares and his
lieutenants felt that they had enough to digest just integrating Opel/Vauxhall
into PSA Groupe, without taking on another major project – such as sorting out and
integrating a big admin/engineering operation that was 10,000km away, and culturally-foreign.
Given Mary Barra’s edict that every GM division;
every GM operation; every GM product has to pay its way, it makes sense to me
that turning off the tap of money required to maintain the Australian operation
would have a certain appeal to someone like Mary Barra.
However, it is apparently not going to
happen, which is why GM President Dan Amman rushed to convey to Australian and
New Zealand journalists at the Geneva Salon, that GM was 100% committed to its
Down Under divisions.
GM might be able to keep its minions in the
negotiating room quiet about the Holden bombshell, but that’s not to say any of
the PSA attendees would feel inclined to keep their mouths shut. After all, it
could be a proud boast for the French team to tell everyone that: “We were
offered ‘Olden too!”
After reading this essay to this point you are probably wondering why I have not even mentioned the 'value' of the Holden brand. I would have thought it was obvious. Holden is an immensely valuable brand in Australia, and has ongoing potential to be exploited by GM, or anyone else for that matter.
However, after the shift from locally-manufactured muscle cars like the RWD VF Commodore, to a more dainty, FWD Insignia from Opel, GM-Holden needs to do a lot of work (that's code for: spend a lot of money) making sure that the switch to 'European Commodores' is accompanied by an extensive, credible explanation of the value of the new cars. It's sort of a 'Back to the Future' situation.
Keep in mind, the original 1978 Holden Commodore was born from Opel's development of a new Opel Rekord, which Holden piggy-backed on, to create an Australian version - our first Euro Commodore!
After reading this essay to this point you are probably wondering why I have not even mentioned the 'value' of the Holden brand. I would have thought it was obvious. Holden is an immensely valuable brand in Australia, and has ongoing potential to be exploited by GM, or anyone else for that matter.
Keep in mind, the original 1978 Holden Commodore was born from Opel's development of a new Opel Rekord, which Holden piggy-backed on, to create an Australian version - our first Euro Commodore!
Industry
Rationalization.
The speed with which rationalization is
happening in the global car industry at the moment is eye-watering, and believe
me, it’s only going to speed up in the next decade.
You could see Toyota take over Suzuki and
Subaru (it already has substantial shareholding in those companies); then the
Renault-Nissan Alliance will soak up Isuzu (the Alliance already has deals in
place with Isuzu), and after that will eventually come the carve-up of the Fiat
Chrysler Group when Sergio Marchionne’s fruitless efforts to renegotiate, or service, corporate debt in excess of USD$6 billion begins to fall apart.
Ford could probably soak up Mazda, whilst
GM sheds itself of unwanted operations and becomes a much smaller company than
it is now.
I do worry about Volkswagen Group, because
it clearly doesn’t have all the billions of dollars needed to pay global fines
and reparation costs for cheating, which means it will have to borrow those
funds, then sell enough cars to service the debt. And that ongoing task will still
require substantial funds to continue development and production costs, for all the new product it will need to sustain its business.
Like I said the global car business is
going to wobble, shrink and shake like an unsupported jelly over the next ten
years and I’m not sure where that leaves us.
The web site is lovingly serviced and saved as much as date. So it should be, thanks for sharing this with us. บาคาร่า
ReplyDeleteMy friend recommended this blog and he was totally right keep up the fantastic work! 해외배팅사이트
ReplyDeleteYour work is very good and I appreciate you and hopping for some more informative posts. Thank you for sharing great information to us. get instagram followers free app
ReplyDeleteIts a mind boggling satisfaction examining your post.Its overflowing with information I am looking for and I need to post a comment that "The substance of your post is sublime" Great work. masa sandalye kiralama
ReplyDeleteExtraordinary employment for distributing such a useful site. Your web log isn't just valuable however it is furthermore extremely inventive as well. There will in general be very few individuals who can surely compose not all that basic posts that masterfully. Proceed with the decent composition visit this page
ReplyDeleteThis is only the data I am discovering all over the place. A debt of gratitude is in order for your website, I simply subscribe your online journal. This is a decent blog.. 먹튀검증사이트
ReplyDeleteThanks so much with this fantastic new web site. very fired up to show it to anyone. It makes me so satisfied your vast understanding and wisdom have a new channel for trying into the world. gigantamax pokemon
ReplyDeleteI am not speaking about totally free pens and espresso mugs
ReplyDeleteusing your emblem to them, I am speaking in regards to the digital immediate obtain supplies.
In the last a few years, it is now possible, due to the boom inside the on the web industry.
Check out the bingo reviews to get additional information regarding particular online bingo site and you will earn extensive money.대구오피
I couldn't discover any learning on this issue earlier to.Also work a site and on the off chance that you are ever keen on doing a few. login joker123
ReplyDeleteOur credit fix administrations work to fix past credit errors and confirm credit report precision. Converse with a credit fix master today! York St John University London Campus
ReplyDeleteEssentially, a ISO agent program is the foundation of your business. North American Bancard ISO
ReplyDeleteYour post is exceptionally useful to get some powerful tips to lessen weight appropriately. You have shared different pleasant photographs of the equivalent. I might want to thank you for sharing these tips. Definitely I will attempt this at home. Continue refreshing increasingly basic hints this way. https://betslotjoker123.com
ReplyDeleteGreat job for publishing such a beneficial web site. Your web log isn’t only useful but it is additionally really creative too. There tend to be not many people who can certainly write not so simple posts that artistically. Continue the nice writing Blackout Window Cover
ReplyDeleteHowever, it should not be mistaken that putting your stained object in the dryer will cause the stain to set. So, make sure the stain is removed before putting your fabrics in the dryer. Coffee Chaff
ReplyDelete