The forthcoming introduction of GM's Pontiac G8 GXP and ST (Sport Truck to those of us who would prefer they just call it the El Camino) at the New York Auto Show has the Australian GM division Holden crowing its success. "The truth is that under the shadow of the Mitsubishi closure announcements, across the other side of the city, the GM Holden plant has been quietly exporting its head off and making great inroads with the development of new model cars to new markets around the world," says Holden Honcho Kevin Foley. The Sydney Morning Herald reports that Australian Industry Minister Kim Carr joined the Aussie cheerleading, saying "GM Asia-Pacific actually out-performed the parent company in 2007, thanks in part to a strong showing from Holden." GM's plan to ship more Pontiac-branded Holdens stateside may actually exacerbate this imbalance. GM's purchasing chief told a recent suppliers conference that higher fuel costs have already increased GM's transport costs by $84 million this year alone. As excited as some enthusiasts are to witness the return of the El Camino, shipping more cars from the opposite end of the planet are not going to do wonders for GM's bottom line.
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$84 million in increased fuel costs isn’t the same as losing $84 million or anything. I mean…it’s not like those cars would have been free otherwise. How much do they save by not having them built in the US, all things considered? Isn’t there a savings of using plants already built, and people already hired?
The cost savings of using existing capacity must be factored in rather then tossing out a single expense and making it look bad.
A reasonable point, Jason, and I don’t think that number is all about the G8 either.
Still, the whole Holden Hail Mary is just a distraction. They are throwing this, and lots of other things, against the wall hoping something will stick. Is this really a better idea than coming up with a plan that will really dig them out of the red, rolling up there sleaves, and making it happen?
A Commodore SV6 starts at $40k in Australia. The Australian dollar is almost at parity to the US dollar. The G8 V6 starts at about $28K. Sounds like a substantial loss to me, above and beyond the shipping costs.
You mean like building the things in GM’s under utilized plants here in NA?
Paul: That’s how much they’re asking for it, it really has nothing to do with how much it costs to make, so I don’t understand what you mean by a “loss”.
Lich: Re-tooling an existing plant isn’t free, either. Transportation from Australia is just that, pretty much a self-contained expense. Making the cars elsewhere costs money also, and exactly how much is a lot harder to nail down.
I like the bit about Holden out performing the parent company.
Is there another corporation on the planet (never mind the auto industry) that didn’t out-perform GM financially?
While these are cool vehicles the point remains that they won’t make a diff for Duh General, regardless of whether they make a little or lose a little.
Frankly it is a far easier task, IMHO, to get the attention of enthusiasts for a year or two than to deliver product that bring in the bacon with the public year after year after decade.
GM’s gotta’ do more than wow us gearheads and the journalists with a few pretty faces and big motors.
My thoughts,
Bunter
Jason: “Paul: That’s how much they’re asking for it, it really has nothing to do with how much it costs to make, so I don’t understand what you mean by a “loss”.”
Are you suggesting that Holden has a 30+% profit margin on the cars they sell in Australia? I don’t think so. https://www.thetruthaboutcars.com/editorials/on-the-beach-is-ford-and-gms-future-in-australia/
Paul Niedermeyer :
March 17th, 2008 at 1:57 pm
A Commodore SV6 starts at $40k in Australia. The Australian dollar is almost at parity to the US dollar. The G8 V6 starts at about $28K. Sounds like a substantial loss to me, above and beyond the shipping costs.
Or that might just be a good way of transferring cash and resources to an offshore subsidiary before the North American operations goes through chapter 11.
If shipping cost vs. the cost of retooling a North American plant is more or less a wash then this is more a transfer of resources within GM than it is a loss for GM.
Oh good, a G8 sport truck. Rushing in to fill the gaping void left by the SST which has been sorely missed by at least several people.
NickR,
Good one, thanks.
I really think it will sell better, but I still liked your joke.