The Truth about Manufacturing cars in Australia

[jpd80]

Originally Posted by DanielXR8

Holden have always been more aggressive in trying to protect their market share and find new ones. The VF is a bold move, but really whats the alternative? Fords approach is more a lingering death of a thousand cuts.

I also think when it comes to Ford and Holden, Holden plan on being the last man standing and they don't plan to go anywhere without a fight. Holden swing and miss sometimes, but you have to give them credit for never giving up without a fight. VF is proof of that.

But don't you see that the more exposed that holden is to risk, the greater is the chance that it could fold more quickly
if things don't go to plan. Holden has spent a lot of VF, cut their prices - none of this is a dead set guarantee to increase
sales in the long run. To me this is no different to grandiose export plans with little profit.

What has Ford risked so far?
Precious little until the end of next year, while production volume is important,
it is bloody dangerous to trade small efficient profitable production for increased
production and sales numbers, that's the danger I see here.

Everyone will laud VF for its technology and lower pricing but mark my words,
this is Holden's last big roll of the dice with Commodore...

[Rodge]

Originally Posted by jpd80

But don't you see that the more exposed that holden is to risk, the greater is the chance that it could fold more quickly
if things don't go to plan. Holden has spent a lot of VF, cut their prices - none of this is a dead set guarantee to increase
sales in the long run. To me this is no different to grandiose export plans with little profit.

What has Ford risked so far?
Precious little until the end of next year, while production volume is important,
it is bloody dangerous to trade small efficient profitable production for increased
production and sales numbers, that's the danger I see here.

Everyone will laud VF for its technology and lower pricing but mark my words,
this is Holden's last big roll of the dice with Commodore...

I like the kit list and pricing point of the Calais V. Regardless of whether Holden has made a bold gamble or not if Ford don't substaintially improve the currency of their technology in the next Falcon I predict there will be a serious number of Falcon owners changing horses. Someone has their business case right...and I think at this stage its Holden.

[jpd80]

Originally Posted by Rodge

Someone has their business case right...and I think at this stage its Holden.

There's a difference between a business case and buying sales...

Over $5,000 off RRPs is Holden's way of surrendering to market pressure and
giving up any chance of quickly recovering any of VF's development costs.

Sure it a great lure for buyers - that's why its done but its ripping the guts out
of their business plan for VF.

[jpd80]

So what options does Ford have at present that could be made standard and offset some of VF's impact,
- EPAS and park assist are not available
- 8" colour touch screen and 19" wheels from XR6 pack
- Rear view camera and parking sensors from G6 pack
- Dual Zone climate control?

Sure FGII will be under it when VF comes out but putting a few value pack options
to good use and keen pricing could see the Falcon survive better than most think.
I'm betting we'll see both a G6 LE pack or XR6 Special edition that will give Holden a run for its money.

Were also forgetting old mate, Territory and its pricing stability helping Falcon get through,
redoubling efforts in FGII and SZ features may see Ford enduring this difficult next 12 months.

[janddbone]

All three levels of Government need to commit to buying Australian vehicles. There is an extra 50,000 sales annually without manipulating any trade laws...

[Charliewool]

The "BILLION dollar VE" got me thinking... Where do the bucks go?
Be interesting to ascertain just WHAT the associated costs are when producing a newer model, whether it be from VE to VF or in Ford's case, BF to FG?
What I mean is they already have the employees, from design right thru to production line personel.
These guys are paid the same whether they are designing and building old or new models.
They have all the plant and machinery, paint shops, assembly line etc.
The component suppliers still supply similar quantities for new models, be they new fabrics, revised audio, new design rims etc. There'd be similar quantities of nuts, bolts, clips and screws.
Ok, no doubt, there's probably a large outlay with outside firms making new stamping dies, and out-sourced castings and forgings (which USED to be done in-house anyhow)
But a BILLION DOLLARS??

[mik]

If the dollar stays at its present position or even goes a little lower and stays there for a year or 2(crystal ball stuff), for our ff clever numbers people, how long would it take to have any good effect on our local car industry if at all???

[Joe5619]

Originally Posted by jpd80

There's a difference between a business case and buying sales...

Over $5,000 off RRPs is Holden's way of surrendering to market pressure and
giving up any chance of quickly recovering any of VF's development costs.Sure it a great lure for buyers - that's why its done but its ripping the guts out
of their business plan for VF.

If I hear one more person say Holden is going to get reduced revenue from these new RRP price changes I'm going to go postal!! The new RRP are still rip off prices for these cars & no real change has happened here in anyway..


The new RRP will help resale values (on paper) & might draw a few more customers who think they are now cheaper & didn't know about the huge discounts to start with.

[jpd80]

Originally Posted by Joe5619

If I hear one more person say Holden is going to get reduced revenue from these new RRP price changes I'm going to go postal!! The new RRP are still rip off prices for these cars & no real change has happened here in anyway..


The new RRP will help resale values (on paper) & might draw a few more customers who think they are now cheaper & didn't know about the huge discounts to start with.

You may well go postal but every new model reverts to RRP plus on road costs for around six months or so,
that is gold for manufacturers and by reducing that RRP, Holden has just admitted to keeping prices basically
slightly higher than where they are but here's the thing, Holden now has a +$300 bill million for VF.

The new RRP has absolutely killed VE resle value, buyers are going to get a huge shock trading in their VEs,
you get nothing for nothing and the sooner people realise they haven't won the lotto with VF the better...

[Dr Smith]

Originally Posted by Charliewool

The "BILLION dollar VE" got me thinking... Where do the bucks go?
Be interesting to ascertain just WHAT the associated costs are when producing a newer model, whether it be from VE to VF or in Ford's case, BF to FG?
What I mean is they already have the employees, from design right thru to production line personel.
These guys are paid the same whether they are designing and building old or new models.
They have all the plant and machinery, paint shops, assembly line etc.
The component suppliers still supply similar quantities for new models, be they new fabrics, revised audio, new design rims etc. There'd be similar quantities of nuts, bolts, clips and screws.
Ok, no doubt, there's probably a large outlay with outside firms making new stamping dies, and out-sourced castings and forgings (which USED to be done in-house anyhow)
But a BILLION DOLLARS??

IIRC Holden spent a huge amount on plant upgrades like new presses etc, so the actual Billion dollar baby was more like 500-700mill baby and 300-500mill renovations.

[jpd80]

And IIRC, Holden needs to do another similar upgrade before the next Cruze product cycle starts

[Joe5619]

Originally Posted by jpd80

You may well go postal but every new model reverts to RRP plus on road costs for around six months or so,
that is gold for manufacturers and by reducing that RRP, Holden has just admitted to keeping prices basically
slightly higher than where they are but here's the thing, Holden now has a +$300 bill million for VF.

The new RRP has absolutely killed VE resle value, buyers are going to get a huge shock trading in their VEs,
you get nothing for nothing and the sooner people realise they haven't won the lotto with VF the better...

Those days are long gone & if you think Ford are going to get a 6 month period of higher prices for 2014 Falcon your dreaming. The current level of pricing is a reflection of what is happening in the market place, there is no going back now.


Also, are these RRP that cheap anyway??
Lets take a Auto V6S (on-one is buying Manual)
36K + 2K Auto + 3.5K on road = 41.5K driveaway. They are going for 36K driveaway now. So there is still 5.5K of room to move there!!

[jpd80]

Originally Posted by Joe5619

Those days are long gone & if you think Ford are going to get a 6 month period of higher prices for 2014 Falcon your dreaming.

How about you reserve judgement until you see it......

[jpd80]

And my point is that Ford doesn't have to test that theory for another 15 months or so.
Long enough for VF to blow itself out.....

[bobthebilda]

Originally Posted by mik

If the dollar stays at its present position or even goes a little lower and stays there for a year or 2(crystal ball stuff), for our ff clever numbers people, how long would it take to have any good effect on our local car industry if at all???

Doesnt mean it will have any effect. The Australian dollar has dropped a bit against the US dollar which Jeeps and Chryslers etc may become a bit dearer, it really hasnt done anything against the japanese yen of late (altho Oz dollar has strengthened alot against yen in last year or so, so jap cars will be no price change, and the australian dollar has actually got 10% stronger against the Thai Baht in the last 6 months. This could make Thai cars dearer, but you got to remember that a Mazda 3 etc (thai built) is being sold for circa $20990, but its being landed here for about around $15,000 ( or even less). So worse case scenario, its going to be 10% of the $15,000 which works out to be approx 7.5% of the $20990 price.

A 7.5% advantage can be lost in so many ways. A thai worker gets a 5% pay rise, they get paid an extra 50 cents a day, an aussie car worker gets a 5% pay rise they get an extra $10 a day (advantage lost). A thai factory makes 400,000 cars a year, and its australian competitor makes 75,000 cars a year (advantage lost). The australian dollar was below 75 US cents for a great deal of 2009, and didnt reach parity (after the GFC) until 2011, it didnt help the local manufacturers at all.

[eb2fairmont]

should put an australian content tarrif on cars with <30% australian content.

[stevz]

Originally Posted by jpd80

How about you reserve judgement until you see it......

The same could be said for many of your comments.....

[jpd80]

Originally Posted by stevz

The same could be said for many of your comments.....

What, that Holden is taking a big gamble?
If you bothered to read my comments in the right vein,
you'd see that they are not harsh, merely informed concern.
If Holden falls, so too does Ford.

[XP6]

" A thai worker gets a 5% pay rise, they get paid an extra 50 cents a day, an aussie car worker gets a 5% pay rise they get an extra $10 a day"

5% pay rise for a blue collar worker?(wouldnt be common in either country)
WTF I been missing out somewhat, if you dont give workers wage rises to keep up with inflation they wont stay workers for long will they... talk about shooting ourselves in the foot.

Tell me why its a luxury for steak in this country for the common family (and why do tiny lamb chops cost $2.50 ea...) but we export beef to these country's average citizen who earn lucky too be 10% of our wages?

[stevz]

Originally Posted by jpd80

What, that Holden is taking a big gamble?
If you bothered to read my comments in the right vein,
you'd see that they are not harsh, merely informed concern.
If Holden falls, so too does Ford.

Not that in particular, I meant in general.
You are happy to spruik your assumptions and opinions as fact (many of which have proven false or incorrect in the past) but when someone else shares their opinion you tell them to "reserve judgement until they see it". No offence jpd but I find that highly hypocritical.

[ryeman]

Originally Posted by jpd80

There's a difference between a business case and buying sales...

Over $5,000 off RRPs is Holden's way of surrendering to market pressure and
giving up any chance of quickly recovering any of VF's development costs.

Sure it a great lure for buyers - that's why its done but its ripping the guts out
of their business plan for VF.

It (pricing) surely isn't Holden/GM's response to the fact that we know how much cheaper it is when sold in the US as a Pontiac?
Could this be the beginning of pricing alignment as company policy?

[BroadyFord]

In other news...

Toyota expands temporary workforce

http://www.goauto.com.au/mellor/mell...257B720027BCA8

Jump in export demand has Toyota scrambling for 140 new workers

TOYOTA Australia is temporarily expanding its workforce to help it meet an unexpected jump in export orders.

The Altona-based car-maker confirmed today that it had already added 70 workers to its Altona North production line to help it meet extra orders mainly from its export markets, with another 70 soon to join the company.

The car-maker exports its Camry sedan to Middle Eastern countries including Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.

Toyota public affairs manager Glenn Campbell said the unexpected jump in orders would help the car maker produce about 70,000 cars for export this year – the same number it produced last year.

The temporary jobs boom is a boon for Toyota, which early last year slashed 350 jobs in response to falling international demand and a rising Australian dollar that made its cars more expensive to build and sell.

The company also opened a new 2.5-litre four-cylinder engine plant last year that feeds into the locally made Camry and petrol-electric Camry Hybrid, with 16,000 destined for export to new markets including Thailand and Malaysia.

Toyota is believed to be close to making a decision about a third model that it will add to its Australian car-making operations, with the most likely candidate the RAV4 soft-roader.

A generational shift for the RAV4 saw it move to the same platform as both the locally built Camry four-cylinder sedan and closely related V6-engined Aurion V6, making it an easy fit for the Altona North line and potentially adding valuable volume to Toyota’s Australian production.

[jpd80]

Originally Posted by stevz

Not that in particular, I meant in general.
You are happy to spruik your assumptions and opinions as fact (many of which have proven false or incorrect in the past) but when someone else shares their opinion you tell them to "reserve judgement until they see it". No offence jpd but I find that highly hypocritical.

Point taken but,
The difference is that I raise concerns about known elements in the VF Commodore based real data
like actual prices, actual equipment levels and intention of Holden to increase sales by reducing potential profit.
The argument against the 2014 Falcon ability to compete as base on zero information about the car to form an opinion either way...

[stevz]

Originally Posted by jpd80

Point taken but,
The difference is that I raise concerns about known elements in the VF Commodore based real data
like actual prices, actual equipment levels and intention of Holden to increase sales by reducing potential profit.
The argument against the 2014 Falcon ability to compete as base on zero information about the car to form an opinion either way...

Unless you have internal access to GMH's finance and accounting department, you have absolutely no real evidence of factors such as costs/profit per unit, previous transaction prices and how the cuts in rrp's have been projected and accounted for, so really all you are doing is making more assumptions.
IMO having more units to amortise costs over is more important than outright profit per unit as it helps keep overheads down and supports the supply chain and dealer networks.
They could make 100% profit per unit if they really wanted to, but if they only sold 5 cars per year then there would be no point being in business.

[BHDOGS]

isnt holden starting front wheel drive global cars in 2016 that seems to be the story getting around so this is holdens last rear wheel drive car anyway?

[1TUFFUTE]

Originally Posted by stevz

Unless you have internal access to GMH's finance and accounting department, you have absolutely no real evidence of factors such as costs/profit per unit, previous transaction prices and how the cuts in rrp's have been projected and accounted for, so really all you are doing is making more assumptions.
IMO having more units to amortise costs over is more important than outright profit per unit as it helps keep overheads down and supports the supply chain and dealer networks.
They could make 100% profit per unit if they really wanted to, but if they only sold 5 cars per year then there would be no point being in business.

yep that's the way...critacise a well known factual member here...and then punch yourself in the face by doing exactly what you criticized him for. An opinion based on nothing but...your opinion...with no facts. Jpd backs his comments up with facts enough of the time to get the respect to have the occasional whirl with theories, so give it a break.

And from the facts ive seen floating around...ford seems to constantly show they truly do know what they are doing in hard times. Holden seems to follow the big spending no holds barred attitude tht got the mother ship in the US in so much trouble.But as usual time will tell. Either way ford aus has class leading products that make a mockery of holden offerings....so on that level ford really do know what they are doing.

[jpd80]

Originally Posted by stevz

Unless you have internal access to GMH's finance and accounting department, you have absolutely no real evidence of factors such as costs/profit per unit, previous transaction prices and how the cuts in rrp's have been projected and accounted for, so really all you are doing is making more assumptions.

While that may be true, there's enough being said in the public to get an idea of what's going on.
I simply state that Holden is choosing production over maintaining potential profit on fewer vehicles built
and that is putting more pressure and risk on its business.

IMO having more units to amortise costs over is more important than outright profit per unit as it helps keep overheads down and supports the supply chain and dealer networks.

Good, you finally challenge me with the real meaningful grounds for debate.
So if you make more units, expend more resources and costs but cut selling price,
how many more units do you have to sell to make the same profit you would with the higher RRPs?

They could make 100% profit per unit if they really wanted to, but if they only sold 5 cars per year then there would be no point being in business.

Sure and building 10,000 Commodores a month for little or no profit would be even worse with labor and costs expended to do it.

So somewhere in between lies the sweet spot. "Right Sizing" is all about matching true demand to production,
And what Mulally showed Ford was that not as many costs are as fixed as people believe.
If your production volume becomes less, the change can be asymetrical and still give a good ROI.

In the end, all I have said is that :
1) Holden is looking to increase production by lowering its RRPs (you cocnur with that)
2) Lowering RRP on a brand new model reduced potential profit per car (you also concur)

Here's where we differ:
3) By doing that Holden is potentially increasing exposure to greater risk by having to make more products
at increased total cost in order to get similar profit instead of keeping RRPs higher and selling less.

The nexus of the problem is that people want to believe that by lowering RRP, sales will increase
and that those increased sales will nett more profit and more business activity, something that's not guaranteed.

I hope VF is a success and increases sales per month but my concern is how it achieves that by reducing RRPs across the board.
Holden is making a gamble that lowering prices will increase net production and profitability - that is where I see the real risk.

[jpd80]

I will admit this, the changes in pricing probably won't affect Evoke or SV6 profitability that much, where the drama comes in
is the reduction in pricing applied to premium products that would normally command much higher prices and deliver
far more profit per vehicle - that's where I see the reduced profitability.

[FalconXV]

Originally Posted by jpd80

I will admit this, the changes in pricing probably won't affect Evoke or SV6 profitability that much, where the drama comes in
is the reduction in pricing applied to premium products that would normally command much higher prices and deliver
far more profit per vehicle - that's where I see the reduced profitability.

That might be offset by a higher takeup rate of, say Calais V compared to Calais, now that the flagships are more accessible.

[BroadyFord]

The Aussie dollar has hit a new year low, dropping below 0.97

Great news for local manufacturing! Holden should ramp up exports.