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Why GM Decided to Disinvest in Holden?

After 72 years of serving Australians, Holden shut its business in 2020 due to several reasons. The lack of investment for newer models by GM- its parent company and series of misguided or false advertisements done to change the brand’s appeal are some of the reasons they failed. While GM has axed Holden’s business in totality, they guarantee that Holden parts and services will be available through their after-sales network for at least ten years.

Before shutting the business entirely, Holden stopped manufacturing in Australia in 2017.

Back in 2019, Holden marked the lowest ever profits since 1948.

As per the local news of Australia, it is believed that is when GM pulled former Toyota executive out of retirement with an assurance of vast and new model ranges, which planes dropped in his first nine months in the office. That is probably when GM executives at the headquarters decided to axe the Holden in Australia.

As the headquarters were discontinuing and cancelling plans and models, the executives in charge of Holden’s future in Australia started to jump ship midway through 2019. The dealers were left to clear the remaining stock of Commodore and Astra after they discontinued in 2019.

Even after GM invested approximately 100 million dollars in converting the Acadia and Equinix to right-hand drive, these cars sold merely at a fraction of their original price. Acadia and Equinix being their latest launches in 2017 and 2018, respectively, tremendously failed in the market.

While their remaining lineup was outdated and pending a complete changeover and upgrading, their parent company was hesitant to invest as GM recovered from bankruptcy.

Since then, GM has been unwavering about disinvesting in loss-making markets as they pulled out of Europe by selling their Opel and Vauxhall badges to French automobile moguls, Peugeot-Citroen.

After Europe, the eye was set upon Australia, Thailand, and Newland as these regions yielded high losses. The cost to make right-hand drive vehicles suited to these regions was straight-up expensive.

It would cost GM $1 billion to introduce the next Colorado ute, of which they sell only 50,000 in Asia pacific. Or the company could go a better route where their investment would bear fruit. They could pump this $1 billion into developing the next Chevrolet Silverado and GMC trucks, of which they sell more than 750,000 at a higher profit margin in the US.

Interference from the parent company, series of missteps, outdated products, appalling marketing techniques made Holden’s demise inevitable.

Adding to the list, high production costs of Holden parts, small domestic, increase in global competition, end of financial assistance by the government; caused a perfect storm of unfavourable economic conditions leading to Holden.

The shutdown marked the end of Australia’s most iconic brand. The Holden name has been a part of the Australian culture as much as meat pies, football, and kangaroos. However, with the complete shutdown of their business, dealerships are entitled to display the remaining stock of cars.

Furthermore, Holden is establishing a service network to make Holden parts available. The guarantees and warranties on cars and Holden parts will also be honoured through their after-sales network, as stated in the terms. To build their network after shutting down their business, Holden offered each of the existing dealerships an opportunity to serve as an authorized service outlet.

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