Holden won't be thousands of dollars cheaper with foreign imports

HOLDEN cars will not suddenly become thousands of dollars cheaper when the company begins to import its full model line-up. Here's why.

HOLDEN cars will not suddenly become thousands of dollars cheaper when the company begins to import its full model line-up from low-cost Asian countries from 2017.

Although the manufacturing cost of the imported cars will be $3750 less than what it cost Holden to make, the savings will likely not be passed on because it made a loss on its Australian cars.

News_Rich_Media: Holden's CEO says the decision to pull manufacturing out of Australia was based on years of deliberation.

After Holden posted its second-biggest financial loss on record last year, the company's chief financial officer George Kapitelli said: "We are losing [money] on our locally produced cars and that's obviously a position we need to reverse."

"Holden's imported portfolio is profitable. The losses … are a direct result of Holden building cars in Australia," Mr Kapitelli said in May.

News_Image_File: Going going gone ... Holden cars sit on the yard of a Holden dealership in Sydney Picture: AFP

A statement from Holden yesterday said: "Holden will not speculate on future pricing strategy for vehicles that are four years away.

"We have and always will have a continuous focus on offering Australian drivers the best value for money. That will not change."

Even the proposed Free Trade Agreement with South Korea - which would remove the 5 per cent import tariff on vehicles imported from there - will not necessarily affect prices.

News_Image_File: The Holden flag is lowered .... out front of the Elizabeth Plant by a security worker. Picture: Mark Brake

The biggest seller of Korean cars in Australia, Hyundai, says currency changes have more impact on new-car prices than do import tariffs.

"There are a multitude of variables that affect the pricing and profitability of imported cars," said Hyundai Australia chief operating officer, John Elsworth.

"If you reacted to just one, you'd be changing your pricing all the time," said Mr Elsworth. "You have to work longer-term in this business."

News_Image_File: Holden cars sit ... in the yard of a Holden car dealership in Sydney. Picture: AFP

Holden was $152.8 million in the red in the 2012 calendar year despite $73.5 million in government funding. Its biggest result in the red was $210.6 million in 2009.

The 2012 figure means Holden has lost $730 million over six of the past eight years, and a $202 million profit over the same period.

The last time Holden finished in the black, in 2011, the profit of $89.7 million was identical to the taxpayer funding it received in that calendar year.

This reporter is on Twitter: @JoshuaDowling

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