Holden looks to USA deal
A vital meeting sets the scene for Holden's biggest international deal yet
Extracted article by Bruce Newton in Detroit, 7 January 2003, www.goauto.com.au

THE first concrete step toward the manufacture of Holdens in the US happens this week when company boss Peter Hanenberger has a vital meeting with top General Motors executives.

If it pulls together, the deal has the potential to be a financial bonanza for Holden, although Mr Hanenberger would not speculate on the level of return.

"What we are driving is to establish our company as the true Australian premium car manufacturing company being built to be sustained for many, many decades to come," Mr Hanenberger told GoAuto at the Detroit auto show this week. "This is now the step to do this."

Both Holden and GM are keen to pull a deal together which would see the next generation VE Commodore platform underpin cars being built in North America by 2006/7 for the likes of Buick, Chevrolet and Pontiac.

Mr Hanenberger meets with GM vice-chairman Bob Lutz and North American operations president Gary Cowger on Wednesday US time to start thrashing the deal out.

Among the discussions will be what models are suitable for US production. Definite prospects include the Commodore ute as a new generation Chev El Camino and the Statesman as a reborn Buick Road Master, both already mooted by Mr Lutz.

Mr Hanenberger is also keen to get the forthcoming all-wheel drive Cross8 utility and wagon considered for the North American market, although Mr Lutz is not interested at the moment.

Holden has already smoothed one of the biggest potential hurdles by developing the highly flexible VE platform for global use. Due for introduction in Australia in 2005, it is capable of taking all-wheel drive as well as rear-wheel drive.

Mr Lutz first confirmed to GoAuto last February his desire to exploit Holden's ability to develop a low-cost rear-wheel drive platform for use in forthcoming GM large passenger and performance cars in the US.

Speaking to the Australian media at last week's reveal of the Holden Monaro-based Pontiac GTO in Los Angeles, he again confirmed his support for Holden to supply its engineering expertise.

"They (Holden) just do probably - I think - from a value standpoint - the world's best rear-wheel drive car, because they achieve extremely close to the dynamic excellence of a BMW for a far lower cost and price," Mr Lutz said.

"That team has just demonstrated genius in doing wonderful cost-effective rear-wheel drive cars."

The deal Holden is chasing would see it:
* Become GM's centre of expertise for development of rear-wheel drive platforms.
* Play a key role in the manufacture of the platform in North America and the cars that sit on it.
* Continue the export program to the US which begins late 2003 with the reborn GTO.

Mr Hanenberger has ambitions to increase annual exports to the US from the current level of 18,000. He believes further negotiation with the United Auto Workers union in the US - which set the 18,000 cap on GTO - can reset the limit to 30,000.

But it is the local US manufacturer that has the potential to produce much bigger numbers, although estimates are not available as yet.

Mr Hanenberger says 2006/7 would be the kick-off timeframe. Initially, to keep costs down, he anticipates selling only slightly re-styled and engineered Holdens in North America as domestic brands, as is being done with the GTO.

But by 2012 he believes the project could be in the financial position where unique local sheetmetal could be draped over the Holden-developed platform.

"The problem of GM at this time is that with all the other programs they cannot afford to bring in a rear-wheel drive platform. They all have to do it themselves," Mr Hanenberger said.

"But with our low-cost approach and sharing of a lot of components, we can make it happen for North America.

"So assuming that by 2012 you would have tooled up maybe 60 per cent of the stuff, over time that gives you then a good base to maybe at that time to use just the platform.

"But this is a huge investment because you have your own dies which you don't share anymore. But by that time maybe the money is available because all the rest has been tooled up to do this."

This is sure to be one point of discussion between Mr Lutz and Mr Hanenberger at their meeting, as the US "car czar" seems keen to have unique sheetmetal from the start.

"We haven't talked a lot about this yet," said Mr Hanenberger. "Bob talks a lot about a vision, I'm talking more about a business case, I am more focussed on the nuts and bolts."

Mr Hanenberger even suggested Holden may invest in the North American facility - probably a refurbished existing assembly plant - where the Holden-based GM product would be built. It would be another major foreign foray for Holden after earlier this year pumping $US251 million into GM Daewoo to become its major shareholder and spending most of the $60 million required to bring the GTO program to reality.

"That's what we also discuss because this is a new dimension," said Mr Hanenberger.

"The Pontiac GTO we could take on because we can recover this. Here we have to discuss our business, who takes what, what is the pot America puts in, what is the pot Australia puts in. The pot is too big for us."

Following this week's meeting, a combined US and Australian project team is expected to be set up under the leadership of Holden's vehicle line executive Andrew Gay, to start developing business cases for individual models.