Holden boss surprised at Ford small-car decision

GM Holden chairman and managing director Mark Reuss says he is surprised by Ford Australia’s move to abandon plans to build a small car in Australia because it is not financially viable.

Speaking after this week’s announcement of Holden’s new direct-injection V6 engine in Melbourne, Mr Reuss said the Holden plan to build its own small sedan and hatch at its Elizabeth plant in South Australia from the third quarter of next year was on track and that it should be profitable.

Mr Reuss, who will leave his current position to take up his new role of General Motors global engineering vice president in Detroit at the end of this month, said: “I can’t comment on why it was (canned) because I don’t know, but I was surprised.”

He said the Ford and General Motors internal systems were quite different, which might explain why the Holden business case worked and the Focus business case failed.

“There are two completely different product development organisations and two completely different organisations that source product, and I don’t know theirs at all,” he said.

“All I know is that we have got a product development system that will deliver that car and make a little bit of money on it – a lot of money, I’d like to make a lot of money on it.”

Left: Holden's Mark Reuss.

Ford Australia insiders have told GoAuto they cannot understand how Holden will make a profit producing the Cruze in Australia when it felt it would lose money on every Focus it made if its own plan for local production went ahead.

GoAuto understands the fact that Holden is on target to receive far more government funding for its small car plan – $179 million compared with about $20 million – was not a factor in the Ford decision.

“This was a decision on the long-term profitability, not the start-up costs, which really aren’t that big,” said a Ford Australia source.

One of the crucial factors that may have knocked over Ford Australia’s small-car plan was its ability to source its car from what company president Marin Burela described as a low-cost source in Asia, most likely Thailand.

Holden is making changes at its Elizabeth plant in preparation for Cruze production.

Mr Reuss visited the plant to examine the work three weeks ago and says he was immensely satisfied with what he saw.

“It was probably one of the best days that I have had in a while,” he said. “It was really exciting and it is really neat to see the birth of a car in Elizabeth.”