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Subsidies issue sparked by Holden sackings

Posted on: May 22, 2013 by Platinum Direct

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There is a massive backlash now taking place across State and Federal Governments triggered by continued local car worker sackings despite increased taxpayer handouts reaching an all-time high. The latest news of 500 jobs from Holden came just a few months before the launch of the next generation all-new Commodore. The wider worry is that the once-popular Holden appears to be following the Falcon down the sales ratings and no amount of increased subsidies will change anything.

Of the three local makers, only Toyota with its Camry appears to be maintaining reasonable sales. Falcon began to seriously drop down the ratings a couple of years ago and now Holden is seriously suffering. The company has cut production as it reacts to slow sales of the Commodore and its other locally built car, the Cruze. The plant will lose 400 workers over the next few months, while a further 100 will be cut from Holden’s Victorian product development operations. All this despite currently receiving $200 million annually from State and Federal Governments.

Massive speculation is now circulating in the auto industry as to whether the Commodore will remain a local car when the next model runs out in a few years taking massive tax-payer subsidies with it.

The job cuts come just five months after the company laid off 170 workers for similar reasons, and has cast a cloud over the launch of the new Commodore, which will also be exported to the United States as a Chevrolet

Sales of large cars have slumped in recent years as buyers have flocked either to small cars or SUVs. Commodore sales dropped by almost 25 percent last year sliding to a little more than 30,000, about a third of the car’s 1998 peak.

The slump has worsened in the first quarter of this year, with sales plummeting 40 percent to record lows as the current model enters its run-out phase. At the same time, sales of the smaller Cruze have seriously dropped since Holden started building the car in Australia in 2010. Sales last year dipped by 14 percent as the car came under pressure from cheaper imports from Thailand and Japan, while sales this year are down by 30 percent. European cars such as the Volkswagen Golf have also become more affordable – and more popular.

Since 2009, the price of the Cruze had come down by $2500 in order to compete with discounted imports, eating into the company’s profitability.

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