General Motors stopped making cars in Australia more than a year ago but may not be done with the restructuring of its operations Down Under.
Since then, GM has focused on applying painful restructuring measures in the United States. However, a recent report from AFR suggests the U.S. automaker isn’t done fixing its Australian operations.
As GM is now reduced to being a car importer in Australia, reports have emerged that the carmaker is considering an externalization of its importing activities to the country’s biggest car importer and distributor, UK-based Inchcape Motors.
The company is the exclusive importer and distributor of Subaru vehicles in Australia and New Zealand. Inchcape’s retail unit is called Trivett and represents 14 automotive brands including Jaguar, Land Rover, Mitsubishi, Isuzu, Peugeot, Citroën, Subaru, and Volkswagen.
Why the move could make sense
So why would Inchcape be interested in adding Holden to its portfolio? To put it simply, it would take the company’s business to another level, while reportedly costing it less to do so than GM. Holden had revenue of $1.86 billion in 2017, with an estimated $1.78 billion for 2018. Currently, it holds a 6.5 percent share of the Australian market.
As reported by Australia’s Whichcar, Inchcape would continue to import Holden-badged cars directly from GM, but at a lower cost:
“For example, fees for back-office functions and other work are paid by Holden back to its parent company, and Inchcape would be able to sidestep these all together, which should mean cheaper vehicles. Inchcape may also have greater right-hand-drive sales potential for GM due to its presence in the UK market, and rumoured interest in South Africa. All are right-hand drive markets.” says Whichcar.
The report claims bilateral discussions have progressed slowly between the two sides so far. Unnamed sources suggested Inchcape hired one of the big four accounting firms to check the numbers. If the report is accurate, it remains to be seen whether Inchcape is interested in a merger and acquisition type of deal or a joint venture.
We contacted GM about the issue and received a neutral statement via email from a company spokesperson, which is open to interpretation:
“Under the leadership of Dave Buttner, who was appointed in August last year, we are turning around the Holden business, growing sales, re-engaging and re-energizing our distribution network and launching exciting vehicles like the all-new Acadia. We are fully focused on supporting Dave in building a strong Holden for the future, as it remains an important part of GM’s business.”