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Holden screeches to $153 million loss

Holden has announced its 2012 financial results today, resulting in a net loss of $152.8 million.

Revenues fell from $4.3 billion to $4 billion, reflecting lower sales of locally built Commodore and Cruse models, and the blackout of Colorado prior to the new model launch. The profit result also included $226 million in special one-off charges associated with the restructure of the business.

Holden Chief Financial Officer, George Kapitelli said Holden’s 2012 financial performance was the result of an extremely challenging and competitive car market in Australia with unprecedented price competition and discounting.

“Australia is one of the most open and trade-exposed automotive markets anywhere in the world with more than 180 passenger cars to choose from. With the Australian dollar at levels not seen since the early 1980s, this puts particular pressure on our Australian manufacturing operations,” Mr Kapitelli said.

Australia also has the highest number of car manufacturing brands in the world, at last count numbering around 65. Holden is not just competing against other passenger cars, but other styles as well, including SUVs and 4WDs of various shapes and sizes, vans, utes and people movers.

60% of Holden’s sales come from the locally produced Commodore and Cruze. With sales of large passenger vehicles in decline, as consumers opt for other alternatives, the future of Holden’s Commodore is in question – despite Holden claiming the VF Commodore will win the hearts and minds of the Australian public. In March and April this year, the Commodore was pushed outside the top 10 selling cars for the first time in its 35-year history.

Already Holden has been forced to cut the price of the new model, which arrives next month, by $10,000. The new VF line-up will start at $34,990 plus on-road costs, the lowest recommended retail price for a base model Commodore since 1999.

Foolish takeaway

The writing appears to be on the wall for the Commodore, and potentially Holden. It’s unlikely the new Commodore model will change consumers’ behaviour and preferences, and unfortunately, it’s unlikely to lead Holden back into profit.

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