Holden to build all-new small car from 2010

GM HOLDEN has announced it will manufacture an all-new small four-cylinder model alongside the Commodore in Australia from 2010.

Unveiled this morning at the company’s Elizabeth assembly plant outside Adelaide in a major press conference attended by prime minister Kevin Rudd and federal industry minister Kim Carr, the plan is estimated to directly involve between 500 and 600 positions at Holden, plus a similar number of local supplier jobs.

Holden’s small car project, forecast by GoAuto in May, takes advantage of the Green Car Innovation Fund within the Rudd government’s $6.2 billion automotive industry package, without which the company said it would not have proceeded.

The federal government has committed $149 million to the deal, with the South Australian state government contributing $30 million – all of which will be matched by Holden at staged levels over three years. GM Holden chairman and managing director Mark Reuss would not reveal Holden's total investment.

Mr Reuss was today given a spontaneous round of applause by Holden employees, many of whom attended the event with their families despite being on extended Christmas holidays during Holden's forced factory shutdown, finalised the deal with Holden’s embattled General Motors parent company in Detroit about a week ago. The South Australian government was told of the deal two days ago.

The all-new small car will be based on GM's front-drive 'Delta' global vehicle platform, which was developed at GM Opel’s Russelsheim ‘homeroom’ in Germany.

The first model to employ the new chassis architecture globally will be the Cruze, a replacement for GM Daewoo's Lacetti small car, which is sold here as the Viva, but Delta will also underpin the next-generation Astra and even the long-awaited Chevrolet Volt - GM’s ground-breaking new range-extending electric car due on sale here as a Holden in 2012.

The new small Holden will be built in both sedan and hatch forms from the third quarter of 2010 at Elizabeth, alongside the Commodore on Holden’s previous Vectra production line, which ceased operation a decade ago.

Apart from the larger Commodore and its derivatives, the new small car family will be GM Holden's first locally-produced model since, according to Holden, “the Asian economic crisis ended Vectra production in 1998”.

Holden said the new car will be produced with direct-injection petrol and diesel engines, and that liquid petroleum gas (LPG), compressed natural gas (CNG) and ethanol (E85) powertrain technologies, plus idle-stop (stopt/start) technology, are all being considered. The latter could attract further development funding from the federal government’s Green Car Innovation Fund.

The small car plan is projected to cost between $70 and $80 million in wages and $30 million in research, development, design and engineering work at Holden’s Port Melbourne headquarters.

As we reported earlier this month, Holden could also be in a position to produce the Volt here, given it is based on the same platform and that GM Vauxhall will produce the Volt under a plan currently being formulated in the UK.

“Together with government, we are extending the scope and consumer appeal of our local manufacturing efforts,” Mr Reuss said.

“We have been building Holden cars to suit the needs of Australian motorists for 60 years. These plans build on that tradition.

“We recognise the needs and desires of motorists are evolving with growing concern around environmental factors and shifting consumer sentiment.

“Such evolution calls for an innovative approach to complement our current offering.

“Just as our leading Commodore range will continue to undergo technological development, this new vehicle will cater for growing demand for smaller cars focussed on economy.

“We are planning for the future to produce a wider range of cars in Australia to cater for a variety of driving needs,” said Mr Reuss.

“The Rudd Government's Green Car Innovation Fund has provided opportunity to turn our plans into reality.

“This announcement complements the vision we share with the government of reducing Australia's dependence on foreign oil and making motoring better for the environment.

“It demonstrates commitment to an Australian automotive industry which extends beyond manufacturing at GM Holden to thousands of suppliers and dealers across the country.

“That demonstration was clearly seen by our parent company in its decision to support this program.

“The support of the federal and South Australian governments in securing this program recognises the fundamental role which automotive manufacturing makes to national and state economies.

"By working together, we have ensured GM Holden will continue to make a major contribution to the nation's economy for many years to come.” GM group vice-president and Asia Pacific president, Nick Reilly, said today’s announcement was proof of Holden’s ability to play an innovative role within the Asia-Pacific region.

“This announcement recognises the ability of GM, GM Holden and the Australian automotive industry to see the future and move in the right direction," Mr Reilly said.

“This program simply would not have occurred without such partnerships. Producing this vehicle will continue Australia's proud history of innovation as part of the GM group's broader commitment to energy diversity.

“I thank the Australian federal government and government of South Australia for their commitment to manufacturing in the Asia Pacific region,” said Mr Reilly.

Left: Chevrolet Cruze.

Announced during crucial bailout negotiations between its parent company and the US Administration, Holden's small car plan is expected to provide the company with vital sales volume in the wake of steadily declining Commodore sales both locally and in the US, where the future of valuable Pontiac-badged exports remains under review.

The VE Commodore retains a narrowing lead as Australia's top-selling car over Toyota's Corolla, more than one million examples of which have been sold in Australia, it first export destination, since 1967. Toyota Australia ceased Corolla production in 1999, citing unsustainably small profit margins in the super-competetive small-car market.

The Commodore's upcoming smaller sibling will materialise during the same year Toyota will produce a hybrid version of the next-generation Camry - and the year before Ford Australia commences production of its next-generation Focus, which will battle with the Corolla and Holden's new model in the small car arena from 2011.

The Federal Chamber of Automotive Industries (FCAI) also welcomed Holden’s announcement today.

“This is a breakthrough for Australia’s vehicle manufacturing industry,” said FCAI chief executive Andrew McKellar.

“The announcement highlights just some of the possibilities that exist for Australia to produce more fuel-efficient vehicles and to introduce opportunities for the uptake of new technologies in locally-made cars.

“GM Holden’s announcement represents an early dividend for the government’s new car plan, announced only last month.

“It is clear that the new policy arrangements, in particular the Green Car Innovation Fund, have been critical in securing this investment decision.

“It is a tremendous confidence boost for the industry and for Australian manufacturing that we can secure this sort of investment in the current global economic context,” Mr McKellar said.

Federation of Automotive Parts Manufacturers (FAPM) chief executive Barry Comden welcomed Holden's news on behalf of Australian components suppliers, but urged the company to choose equitably between local and foreign parts suppliers.

"Our industry will expect nothing more than to be given a fair and reasonable chance to bid for contracts to supply GM Holden with products and services for this new vehicle," said Mr Comben.

According to Senator Carr’s office, the new car will be around 20 per cent more fuel-efficient and produce 20 per cent less CO2 than current larger vehicles.

“Families travelling 20,000km a year will save almost $500 a year in fuel costs and produce around 1.7 tonnes less in carbon emissions,” said the industry minister’s press release.

Prime minister Rudd said Holden's plan was a win for Australian jobs and motorists, and the environment.

"Back in October we announced a $6.2 billion new car plan for Australia’s future and here we are in December announcing how that plan works here on the ground of the Holden plant at Elizabeth," he said.

"And that is what it’s all about - Australian jobs, doing the right things for Australian motorists, but also doing the right thing for the environment as well. And that is what this new Holden small car is all about.

"This investment by the Australian government of some $149 million out of the new car plan is of course also, part and parcel of an investment by the South Australian government and also part and parcel of an investment from the company itself.

"All in all, we see this investment as supporting up to 1200 jobs initially. That is of course some 600 here at Holden itself and 600 jobs in the automotive supply chain.

"The whole intention here with this new car is to provide more fuel efficient vehicles and therefore provide a sustainable basis for the continuation of the industry into Australia’s long-term future as well.

"This is an important day for the industry, an important day for Elizabeth, an important day for South Australia, an important day to have a realistic basis for confidence in Australia’s future.

"As I said before in my remarks to the working families who were here today, you can either go out there and moan about what is going on in the global economy or you can do something about it. The government’s resolve is to do something about it," said Mr Rudd South Australian premier Mike Rann said Holden's small car deal was a long time coming, but it could not have come at a better time.

"There have been commentators in the past two weeks talking about the end of the car industry in the United States. And so this is absolutely the best possible time to give a jolt of confidence to the industry.

"So I mean what I say, the fight back for the Australian car industry begins right here, right now with this announcement.

"This is what we’ve been talking about for years. I mean we saw the demise of Mitsubishi, we saw Mitsubishi failing to invest in a smaller model.

"For years people have said wouldn’t it be fantastic out here at Holden if there could be a more fuel-efficient, smaller four-cylinder car alongside the Commodore and that is exactly what we’re doing today.

"This is the mother ship of the car industry in South Australia. And the mother ship is about to expand," said Mr Rann.

Mr Reuss used his speech to stress his appreciation for the cooperation and committment demonstrated by both the federal and state government.

"I’ve been in the business for quite a long time and I’ve never seen the understanding and the depth of commitment on the far outreach of this industry, into the economy here in Australia.

"The positive news that we’ve received today in a government and from a corporate standpoint on the support of this project is nothing more than remarkable - especially in front of all the headwinds we have on a very serious global crisis that we’re in the midst of here from an economy standpoint.

"The government here truly understands what it means to make things in this economy. They’ve said that over and over again and today they’ve demonstrated that on a very rapid basis on the support of a true Australian icon here at Holden.

"So as we’re known for large cars today, we’re going to also be known for very fuel-efficient, responsible, small cars and large cars here in a new era in Holden.

"And for that I am very thankful. It is something that I think our whole workforce is going to take home for Christmas. You saw all the kids there today, you saw all the families and I tell you it’s an emotional time for me here as an American to be part of this renaissance of this auto-industry in this crisis.

"I just have the largest respect for the government and the hard working people who have earned another chance at another car line here in addition to our Commodore. Thank you." Asked during question time chaired by Mr Rudd exactly how many new jobs the project would create, Mr Reuss said that some of Holden's estimated 500-600 workers on the project will also produce Commodore models.

"There are 500 to 600 jobs that are directly associated in this manufacturing facility with producing this car... There will be some new jobs and there will be some jobs also that produce the Commodore here," he said.

Holden recently announced the the Commodore would become E85 fuel compatible from 2010 as the first in a host of 'green' engine technologies that could also inlclude liquid-injection LPG and diesel power.

However, Mr Reuss said the new small car would also become a volume-selling platform for fuel-efficient strategies including hybrid, but he would not divulge sales or export forecasts.

"We planned a very conservative business case around it. This is our runway for hybrid and advanced technology with this car line," he said.

"The export opportunity is there if the platform obviously can be made in both left-hand and right-hand drive.

"The engine opportunities are going to be very compelling as I discussed earlier with CNG, LPG, hybrid technologies, E85. All those technologies are present in this architecture and I am very confident that the rest of the world is going to be very, very much desiring to have the car." The new model's petrol engine was described as a low-displacement forced-induction four-cylinder, which Mr Reuss said could also be produced locally, potentially extending the life of the soon-to-close engine plant in Port Melbourne.

"There is a possibility that, that all of the engines or some of the engines or, you know, the engines that we have in this global architecture, come from lots of different places, but there is always an opportunity to do that locally as well.

"So you know, we’re going to look at all those options."

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