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Edition 211 – The Lion Will Wimper

In Edition 65 of Growth (Why Holden is dead in the water – 19th April, 2017), I prophesied that “Australia’s Own”, Holden will not survive as a full line importer.

After 69 years of local manufacturing, Holden pulled up stumps in terms of building cars locally at the end of 2017. So, to me, the only surprise about last week’s announcement that General Motors are going to bury an Australian icon by the end of 2020 was the closure date. I honestly thought it had another 5 years in it. That in itself speaks of one of two things:

  1. GM knew that Holden were dead in 2017 and just didn’t know how to handle the political and social fallout of ceasing manufacturing and binning the brand all at the same time; or,
  2. GM’s corporate management are so completely inept that they’ve had to make a quick decision to stem the flow of large amounts of cash out of their coffers.

In my opinion, here’s why Holden is now dead:

  1. They misread the market move in the mid 2000’s towards smaller, more efficient vehicles.
  2. They played hardball with fleet pricing when other, larger manufacturers, were prepared to sacrifice a few dollars for volume. My neighbour’s long run of company car Commodores was replaced 10 years ago by a Volkswagen Golf and never again did a Holden grace his driveway.
  3. They were lazy at selling – they merely expected the customer to buy.
  4. They’ve long exhibited hubris – evidenced by one of my former business partners who wandered into a local Holden showroom in the mid 90’s on a Sunday to purchase a top line Commodore, only to be waved away by the staff as not looking like he had the money to afford it. As Julia Roberts said in Pretty Woman, “Big Mistake!”.
  5. They were hamstrung by a corporate owner that didn’t really like non American product in American showrooms. The Chevrolet SS export programme was too little, too late for Holden.
  6. Their build quality was poor at times, but they argued against any sub-standard product as a one off.  The father of another former business partner of mine virtually walked away from his Holden Cruze, that he’d purchased new, so awful was the response from Holden and it’s local dealer about how crap his car was.
  7. They relied on their heritage to get them through.
  8. They didn’t adjust to a lower tariff environment even though they had plenty of years to prepare for it.
  9. They didn’t push the Australian Government hard enough to have so called “Free Trade Agreements” actually deliver what they meant. Over 200,000 cars per annum that are sold in Australia are made in Thailand thanks to a Free Trade Agreement. However, when Ford tried to export its Territory to Thailand, artificial trade barriers were put in place to the point where the Territory was an uneconomic proposition locally.
  10. When they changed their business model to a full line importer in 2017, they missed a key ingredient – they lacked a “halo” car that would encourage punters to head into the showroom, drool over the Commodore SS-V or HSV, yet walk out with something lower down the product food chain if their budget was limited.

Take a look at that list of 10 reasons above. Now, if you remove the reference to Holden or even the car industry, 8 of them are examples of what every family business needs to be aware of.

The world is changing. Globalisation is here. Consumer purchasing patterns are no longer what they were. If you think your business doesn’t need to change, nor keep looking ahead to what’s around the corner, take heed of the death of Holden. 12 years ago, it sold 1 in 4 cars in Australia. Now it sells 4 in every 100. Soon, that will be zero.

Always look ahead. Never sit still. The businesses that survive and thrive on change are ones that are forward thinking, adaptable and immediately responsive to market demands.