CANBERRA: Holden has made its first annual profit since 2011, with sales of imported vehicles and one-off accounting gains offsetting heavy losses from its local manufacturing operations to deliver an overall profit of $128 million in 2015. But Holden managing director Mark Bernhard is cranky about a continued slide in market share over the first four months of 2016 as Holden sales slide to just 7.8 per cent of the total vehicle market compared with 8.9 per cent this time a year ago. “We’ve got some work to do,” Mr Bernhard said on Friday. But he vowed to only pursue profitable growth. “We won’t just be blindly chasing market share”.
Holden is scheduled to shut its car-making operations in Adelaide’s northern suburbs in late 2017 and a Port Melbourne engine plant later this year as it exits manufacturing in Australia and becomes an importer-only business. Rival Ford will be the first of the three remaining car makers in Australia to shut down its local operations in Victoria in late 2016, while Toyota will also shut its manufacturing plant at Altona in western Melbourne in late 2017.
Mr Bernhard announced on Friday that the car maker remained “consistently profitable” on its imported vehicle range but has continued to be in the red on its local manufacturing operations, which sank to a loss of $85 million. He also said that government subsidies, which amounted to $70.3 million in 2015, would cease altogether once local car-making stopped.
He declined to be specific about when Holden expected to sell the vacated manufacturing site at Elizabeth in Adelaide’s north and it wasn’t an urgent priority. “We’re not in an urgent state to move on it,” Mr Bernhard said. During 2015 Holden sold 102,951 vehicles in Australia, and 46,210 of them were made at the Adelaide car plant, which also built 10,576 cars for export to New Zealand, the Middle East and North America.
Mr Bernhard said the 2015 profit was boosted by one-off accounting reversals of $79.7 million from over-provisions for redundancies after a decision was made in September, 2015 to retain a powertrain engineering team of more than 100 staff at its Port Melbourne operations and a testing ground outside Melbourne. The profits were also lifted by a second one-off accounting reversal of $57 million from over-provisions for suppliers.
Holden tumbled to massive losses of $255 million in 2014 and $554 million in 2013 because of the combined restructuring costs and asset impairments across those two years of $600 million, as it prepared to wind down its local assembly line operations. Mr Bernhard said if Holden were to continue manufacturing in Adelaide beyond 2017 it would have been forced to book an extra $125 million in asset depreciation in its 2015 results.
Holden had a market share of 8.9 per cent in the vehicle market across the 12 months ended December 31, 2015, putting it at the No.3 position behind market leader Toyota and second-placed Mazda. Mr Bernhard said the company had laid the foundation to be a “profitable and sustainable” business in Australia for the long-term as an importer of vehicles, with 230 dealerships. Holden announced in late 2013 that it would shut down its Australian car making operations after then Prime Minister Tony Abbott and his Treasurer Joe Hockey took a hardline stance on the billions in taxpayer-funded handouts which had gone to the car industry over decades.
