Opel/GM – It’s Your Money, Ralph

Anyone who lived in Victoria in the late 1980’s would remember the ad in the video below, from the State Bank of Victoria. The line “It’s your money, Ralph” became as common in regular conversation back then as “Not Happy, Jan!” became in offices around the country five years ago.

——

The news broke last Friday (at 5pm, of course) that Opel would be pulling its cars out of Australia after a spectacularly short 12 months where they sold just 1500-or-so cars to actual customers.

It’s hard to comprehend just how massive a stuff-up this is or how the supposedly smart people running a global corporation could make it, but it’s HUGE and they’ve done it. And believe it or not, this is just the second part in an ongoing saga called Will-GM-Exist-In-Australia-Or-Not?

Right now, there’s plenty of money on both sides of the wager over whether or not GM Holden will continue in any meaningful way in Australia. There’s a very real fear that Holden will cease manufacturing in the near term and become an imports-only business selling cars designed somewhere and manufactured in cheap labour markets in Asia.

Successive Australian governments have already poured millions into Holden and the other two local manufacturers, Ford and Toyota. With Ford pulling the pin on local manufacturing in 2016 and Holden making noises about doing the same, the appetite for propping up the local industry with taxpayer funds has withered considerably. There’s a feeling amongst the people that these global companies are just sucking money out of the locals and it seems to be happening with monotonous regularity.

This latest episode with Opel only poses more questions as to which inmates are running the asylum at General Motors. Why would the Australian taxpayer want to put another cent into a company when the global parent could get a market investment like Opel so completely and utterly wrong?

It’s your money, Aussies.

RuddCarrRight: PM Kevin Rudd and Industry Minister Kim Carr check out their investment….

Australia has put billions of dollars into the car industry, more than $2billion going to Holden alone in the last 12 years. There’s another $2.3billion sitting in the Automotive Transformation scheme to be allocated over the next few years and with Ford pulling out of manufacturing in Australia, Holden is eyeing off a larger chunk of that pot, too.

Here’s a neat little table, courtesy of news.com.au

Government funding over the past 12 years (2001 to 2012):
Holden: $2.17 billion
Toyota: $1.2 billion
Ford: $1.1 billion

Annual average over the past 12 years (2001 to 2012):
Holden: $180 million
Toyota: $95.8 million
Ford: $87.8 million

Cars made locally in 2012:
Holden: 85,000
Toyota: 101,500
Ford: 37,000

Average taxpayer dollars per car built in 2012:
Holden: $2117
Toyota: $944
Ford: $2372

——

It’s your money, Dealers

GoAuto has done the best job of summarising the fall-out from this episode.

There were 20 Opel dealers in Australia last Friday and they learned about the brand’s fate the same day we all did. GoAuto reports that they’d each spent between $500,000 and $3million getting Opel into their showrooms with some of them building brand new facilities for the brand.

Dealers will get some of their investment back directly from Opel, which will reimburse for some vehicles, marketing materials, etc. But what about that extra space that some dealers have just built or are still in the process of building?

IMG_0264Right: An Opel dealership, today. It’s hard to tell if it’s still being constructed or dismantled. My mate Turbin doesn’t care. Thanks to his morning ‘vitamins’, he’s always happy.

What about the opportunity cost of two years wasted on just a year’s sales when that money could have been spent by dealers on a brand that was here for the long haul? Dealers who took Opel on had to sign up to a 5-year commitment. That’s why they put so much money into establishing their Opel presence on site. It’s more than reasonable for them to expect that Opel would honour their end of the deal.

Those showrooms, by the way, were built at Opel’s insistence. Either dealers allocated a significant/new building for Opel sales, or they missed the franchise. Nice.

——

It’s your money, Employees

First of all, let’s spare a brief thought for the Opel employees directly employed by Opel and working in Saab’s old offices here in Australia. There’s not many of them, but spare them a thought anyway because most will be out of a job now.

Same for the dealership staff employed to sell Opels that are no longer going to be sold. Some of them probably left decent paying jobs elsewhere to take up the challenge of building a new brand, one with a solid history within a global corporate giant. Oops.

Taking a wider view, however, and considering the rather large amounts of government assistance that Holden are both in receipt of and anticipating in the future, spare a thought for Holden’s vehicle assembly staff in South Australia.

Mike+DevereuxRight: Holden chief, Mike Deveraux, contemplates some cash.

The company wants a whole lot of government money in one hand. It’s putting its employees in the other hand – and squeezing.

A new employment deal being offered to workers includes a 3-year wage freeze, reduced leave (at a time Holden tells you is OK), reduced breaks through the day, regular drug testing, short notice for what is effectively compulsory overtime if needed and the threat of termination for a vaguely worded ‘inefficiency’.

Some of these are fair enough. I wouldn’t like my car to be built by a guy with a massive case of the munchies. But if I were a Holden employee, sick already from an axe hanging over my head, this new deal wouldn’t have me doing cartwheels or star-jumps.

Given that Holden’s likely to cut and run from assembly in Australia in the next few years anyway, I’d advise Holden workers to hit the halls at their local TAFE (training institution, for you non-Aussies) sooner rather than later.

——

It’s your money, Americans

The numbers we’re talking about in the Australian context are peanuts compared to the taxpayer funded bailout that GM received from the US government back in 2009. But still, this is GM we’re talking about and what we see here is careless planning and reckless behaviour from a bailed out company in a market that’s probably not going to be on the American radar.

My American friends – this is what your too-big-to-fail company is doing outside your borders. This is how they’re managing their business, reorganised and propped up for more than a few years by your money. Opel is a German unit of General Motors and they money they’ve spent on production for Australia, dealerships in Australia, marketing in Australia and even sporting sponsorships in Australia, will be booked back to Germany. But it’s still all part of the big GM family.

You can make of that what you will.

——

I like the fact that we’ve got a car manufacturing industry here in Australia. I like the fact that for the last however-many years, we’ve had a selection of Australian cars that were designed for Australian conditions. I like the fact that the industry drives innovation and creates jobs. I don’t want the industry to go.

At some point, however, you’ve got to wonder when the companies involved will develop and manufacture viable vehicles. GM got itself into a deathwatch position at the turn of the century because it was addicted to manufacturing vehicles that people were buying in reduced numbers. They completely missed the move to smaller, more fuel-efficient cars and they nearly died as a company because of it. It’s killing the Australian industry, too, because buyers moved to small SUV’s or compact cars a long time ago and GM/Ford have insisted on building large sedans right through that move.

I know it’s not easy or cheap to change, but it sure beats the unending losses that lead to closures. Holden seem to be very adept at hoovering the wallets of the Australian government but the whole mess with Opel makes me wonder about the wisdom of propping up a company that’s run at a global level by a bunch of inebriated man-clowns.

You may also like

12 Comments

  1. believe the opel dealers have to just grin and bear it [or call in the receivers], opel were just going down the same road as saab australia e.g. [i’d like that insignia opc with manual transmission….sorry opel australia do not offer that option]…

  2. I feel bad for the people affected by this (dealers, employees, customers) but this was a high-risk venture from the start.

    GM had emphatically established that they have no qualms about leaving dealers and customers hanging during the 2008 financial/bankruptcy crisis, so there was no good reason to think that they would not do so again.

    I still don’t understand what GM was trying to achieve with Opel in Australia. Opel is a damaged brand to begin with, and it targets the same demographic as Holden. I wouldn’t be surprised if most of the few Opel sales came from Holden customers.

  3. That dealership would have been one of the more “modest” outlay. I think it was fully operational. The scissor-lift is there for the covering up of the now hateful signage. It has variously been a Kia, Chrysler then Opel showroom. They would have largely had to replace the old signage and new fitout interior. Being a longstanding GM dealer they would have a good servicing base already. They have already been burnt with GM’s handling of Saab and Hummer. But they now have Renault and Audi, are next to the ex-Opel site.

    BTW: talk of my “viatmins” paints me as a TdF participant or worse, an Essendon player. You know I don’t even do caffeine anymore.

  4. This is precisely what I was driving at with my comment on the Opel post a couple of days back. Of course I didn’t know about the government subsidies. That’s surprising.

    On the GM bashing, you know that I’m a middle-of-the-road apologist for GM. They can be such dunderheads about stuff like bringing/forcing Opel into Australia, and yet there is the genius of the Corvette. They want to import German cars that Australians DON’T want, yet they understand that they must export Australian cars that Americans DO want. Which is it? Stupidity or genius? It depends upon the day.

    The issue with GM seems to be that the left hand doesn’t know what the right hand is doing, and sometimes the left smacks the right just for good measure. That’s what I see here: Opel is not happy about not having a piece of the Holden action, and so they’ll do it alone even if it harms GM overall. That kind of thinking has to stop. There is no victory for Opel if GM fails overall.

    1. The Corvette is the only car made by GM that’s true to its mission and worth the time of day (there are other cars that are true to their mission, but their mission is to be cheap).

      After what they did to Saab (starting way back in 1990), I try and make sure GM don’t get into my consciousness very much – and they don’t. But sometimes they’re so boneheaded even I can’t miss.

  5. The showroom that Opel occupied in Adelaide was once used by Saab. I’m not sure it it had a new one planned? Really Opel should have dug in for the long haul with a five year plan. Not chicken out after less than one year. It has some good models that are better than what Holden sells. There were complaints that Astras cost more a Cruze, but that is the same anywhere. Chevrolet (the brand Holden chooses to re-badge) is a cheaper brand in the markets that sell Opel/Vauxhall. I rather like the Astra GTC and OPC coupes but after the way GM treated Saab, GM is off my buying list permanently. It is perhaps a pity that the GM sale of Opel never happened.

  6. “If it’s not working, quit doing it. “We’re not going to sustain operations in the business that continually lose.” Current quote from GM CEO.

    Not my thought, I didn’t say it. Sort of covers the current situation.

  7. Terrible for the dealers and customers. I so nearly brought an Astra, but in the end had no confidence of the brand longevity here. Occasionally I am right about something. Not often.

Leave a Reply

Your email address will not be published. Required fields are marked *