“We will do the right thing, even though it’s hard”, says CEO Barra.
Detroit-based General Motors has announced the closure of sales, design and engineering operations in Australia and New Zealand with the retirement of the Holden brand by 2021.
The company has also announced that it signed an agreement with Great Wall Motors to purchase GM’s Rayong vehicle manufacturing facility in Thailand, and will also withdraw Chevrolet from the domestic market in Thailand by the end of 2020.
“I’ve often said that we will do the right thing, even when it’s hard, and this is one of those times,” said GM Chairman and CEO Mary Barra. “We are restructuring our international operations, focusing on markets where we have the right strategies to drive robust returns, and prioritizing global investments that will drive growth in the future of mobility, especially in the areas of EVs and AVs.”
“While these actions support our global strategy, we understand that they impact people who have contributed so much to our company. We will support our people, our customers and our partners, to ensure an orderly and respectful transition in the impacted markets,” Barra said.
GM President Mark Reuss said the company explored a range of options to continue Holden operations, but none could overcome the challenges of the investments needed for the highly fragmented right-hand-drive market, the economics to support growing the brand and delivering an appropriate return on investment.
“At the highest levels of our company we have the deepest respect for Holden’s heritage and contribution to our company and to the countries of Australia and New Zealand,” said Reuss.
“After considering many possible options – and putting aside our personal desires to accommodate the people and the market – we came to the conclusion that we could not prioritize further investment over all other considerations we have in a rapidly changing global industry.”
“We do believe we have an opportunity to profitably grow the specialty vehicle business and plan to work with our partner to do that,” he concluded.
GM cited below plant utilization and low forecast volumes at the Rayong manufacturing facility in Thailand as the reason for withdrawal from the Thai market. According to the company, without domestic manufacturing, Chevrolet is unable compete in Thailand’s new-vehicle market.
GM Senior Vice President and President GM International Steve Kiefer said these decisions built on the announcements in January that GM would sell its Talegaon manufacturing facility in India, would see significant restructuring actions implemented in Korea, and put investment in and continued optimization of South American operations.
According to GM international operations senior vice president Julian Blissett, “In markets where we don’t have significant scale, such as Japan, Russia and Europe, we are pursuing a niche presence by selling profitable, high-end imported vehicles – supported by a lean GM structure.”
The company has announced that in the three affected markets, GM will honour warranties and continue to provide parts and service for existing owners. With the withdrawal of the Holden brand, the prior sale of Vauxhall and Opel operations in Europe and the retirement of the domestic Pontiac and Oldsmobile brands, GM and its joint venture partners now sell vehicles under the Chevrolet, Buick, GMC, Cadillac, Baojun and Wuling brands.
As a result of these actions in Australia, New Zealand and Thailand, the company expects to incur net cash charges of approximately $300 million. The company expects to record total cash and non-cash charges of $1.1 billion. These charges will primarily be incurred in the first quarter and continuing through the fourth quarter of 2020.