Holden's fate sealed as rescue deal sinks

Holden's Commodore

Belgian entrepreneur Guido Dumarey's bid to keep Holden's production lines running beyond 2017 has failed, with both parties today conceding to the "insurmountable" challenges of the proposal.

GM International, which manages the Australian operations, and Dumarey's Punch Group issued a joint statement late today saying the rescue bid would not go ahead due to the "insurmountable" challenges with keeping the supply lines alive.

The news comes on the same day as Holden announced it would switch off Cruze production in October - the same time as Ford plans to end more than 50 years of Falcon production - with the loss of 400 jobs.

The statement reads:

General Motors and Punch Corporation have undertaken and completed a detailed global evaluation of a proposal from Punch Corporation to continue manufacturing vehicles at Holden’s Elizabeth plant in South Australia.

Both parties concluded that a viable business model was not possible for this case. Therefore the proposal will not be taken forward.

GM and Punch have communicated on this decision.

As discussions have been governed by a Non-Disclosure Agreement, neither party involved is able to discuss details of the proposal, nor the assessment. 

The challenges to domestic automotive manufacturing in Australia - lack of scale, high production costs, supply base contraction and increasing market fragmentation - persist and cannot be overcome for this business case.

In particular, the wind down of the supply base following the manufacturing exit of the three existing car makers, and the critical production mass they represent, is insurmountable.

GM thanks Punch Corporation for their proposal. GM will continue to consider Punch Corporation, along with other interested parties, to participate in the sale process of the Elizabeth plant and assets after GM ceases local manufacturing.

Punch Corporation will continue to pursue other business opportunities in the Australian automotive sector.

Industry Minister Christopher Pyne said he was "surprised and disappointed" by the decision.

"It [the decison to exit talks] does not match the statements both Punch and GMH have made to me," he said.

"At the end of the day it is a decision for the two parties involved.

"The Government offered every support to Punch in every matter that they raised with us," he said.

"We will continue to offer help to Punch in pursing other opportunities in the automotive sector should they choose to do so."

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  • Mr Pyne's own party were the ones who put the knife through Holden, Ford and Toyota local production. Did everything possible, seriously! I'm sure those soon to be sidelined on welfare will remember just how much effort the Lib/Nat party put in. Is welfare over public supported manufacturing a positive business case? I guess it must be.
  • @ mike. Well said mate.
  • @Mike True
  • @Hewy Why is it up to the government to subsidise costa toy offer subsidies?
  • May have been different if Holden still produced cars that private buyers want to buy - a shame.
  • Sadly the demise of the car industry is just another victim of our Governments (labour and liberal) who are hell bent on creating a 'level' playing field, where Australian manufacturers, farmers and workers continue to get screwed because other Governments support and subsidise their industries. While we are losing our manufacturing skill base our farmers are plotting their produce into the ground and we are getting inundated with poor quality imported substitute, the Government is telling us what a great job they are doing.
  • SUCKS!!!
  • @Hewy Saab was sold, it failed under new ownership. How is it like Saab then? Plethora of articles out there on lack of support from the Australian government for the auto industry. You think Ford GM and Toyota just decided to walk away? No.
  • "..lack of scale, high production costs, supply base contraction and increasing market fragmentation - persist and cannot be overcome for this business case..." THAT'S half the story - cutting of subsidies is a big one. And when someone blames the worker for being paid too much, when the USA and Germany have the highest subsidies to the auto industry of ANY country, I'm sorry, the fault is partly the Australian Government's. Pyne, shut your hole - you gave bugger all assistance since your party came to power...
  • Why do I get the feeling that we're only getting half the story, and that GM really don't want to see someone else make something out of the platform. ie.I don't want it but nobody else can have it either.
  • Is this the same as with SAAB. Someone else wants to give it a fair go, but GM dont want to look stupid when someone else can succeed where they failed?