Holden Cruze: The end of the line

THE decision to introduce the Holden Cruze to local production in 2011 was at once perplexing and resolute.

For the local factory it was a ticket to the future, a crazy/brave idea that defied logic: small cars only make small profits, after all. Plus, it was expected to hold back a currency-powered wave of small-car imports while supporting the Commodore as it declined gradually towards its next generation. That’s quite a job spec.

On the other hand, it was a determined vote of confidence in the future of local carmaking. The Cruze could be the saviour by bringing vital volume to Elizabeth, ensuring it could reach economic levels by producing two models. But there were a number of things that the Cruze could not be.

It couldn’t be a big seller – say, 50,000-plus a year – in this fragmented market, particularly with no export plan. It couldn’t be perceived as a segment leader because it didn’t offer the peace of mind that comes with perceived Japanese quality and, apart from the turbo-petrol engine, it wasn’t engineered in Germany. It couldn’t even offer Korean price appeal; it lost that as soon as it left its Korean home for the Elizabeth plant.

Holden has announced local production of the Cruze hatch and sedan will end on October 7. Was it the right car for Australia?

As things turned out, the Cruze became Holden’s last roll of the manufacturing dice, bringing an end rather than a new start, and that’s where Australia really lost out. If Holden had known the Cruze was going to be its last all-new model, is it possible the company might have done something different?

History shows us that when carmakers have their backs to the financial wall, they sometimes come up with magnificent, radically engineered or boldly styled roll-of-the-dice models, projects that Sir Humphrey might characterise as “courageous”.

Think the Studebaker Avanti – a sharply styled fibreglass coupe with a supercharged V8 – or the Citroen SM – a Maserati-engined coupe bristling with features, including all of Citroen’s hydraulic trickery – and even Bugatti’s Type 57 Atlantic coupe, now worth more than $40 million if any of the three owners would offer one for sale.

If the sober suits at Fishermens Bend had been thinking along these lines, they might have put Richard Ferlazzo’s Efijy into production, although volume might have been an issue. Regardless, it’s a sure bet no one will be offering $40 million for a Cruze in 60 years.

Which is not to say Holden didn’t try hard with the Cruze: The range included two petrol engines – one with a turbo – and a diesel, a locally designed sedan and hatch that included a new Australian rear suspension, an imported wagon, and dashboard connectivity. Holden gave the project its best shot and it paid off initially, with the Cruze selling almost 34,000 in 2011 and giving Holden a quinella of best-selling locally made cars in 2011.

It looked as though the Cruze was ready to take over the leadership in that small field of runners as the Commodore faded, but the Cruze never matched, let along got past, its big brother.

For Holden, the 2011 launch of the locally made Cruze was a frustrating rerun of the Holden VE Commodore launch in 2006, where macroeconomics undermined their best efforts. After years of hard work, the $1 billion 3.6-litre VE had to be released onto a market being roiled by record world oil prices.

While the Cruze represented a much smaller investment of time and money, it was still a body blow for Holden when it had to launch its new baby against a rabid field of imported competitors – all at a time when the Aussie dollar was above parity with the US dollar. Selling 34,000 in 2011 was a real achievement.

The dollar parity did help with the Cruze’s imported drivetrains, but with the US dollar a massive 33 per cent above the historical average of US75c, importers were able to load up on extra equipment without busting their price points. It was like giving the opposition a free kick in front of goal every time your team touched the ball. The dollar was still above US90c in the second half of 2014.

And you can tell all those critics who repeatedly claim that “they don’t make cars Australians want to buy” to pull their heads in. The Cruze was a gutsy attempt to move with the times, even though it meant moving away from Australia’s speciality: D segment 6s such as the Commodore and Falcon. It wasn’t the first time Holden had tried it.

Back in 1998, Holden saw rising oil prices and falling big car sales and concluded some Australians would want a medium car, so it started making the Vectra at Elizabeth. It was also exported to Japan and South-East Asia. You could even have it with a locally made V6 from the Bend.

But affluent Australians demanded more and more Commodores, so Holden dropped the Vectra and switched Elizabeth back to 100 per cent big cars in 2000. Come the Global Financial Crisis in 2007 and Australians didn’t think they were so affluent any more, and they started looking at smaller cars and SUVs.

Well, here’s some news. You can’t turn around a car plant in the same time it takes the ASX 200 index to drop 35 per cent.

The Cruze was going to be a key plank in Holden’s manufacturing platform until the government of Tony Abbott (“I want the motor industry in this country, every aspect of it, to thrive. I really do.”) decided to bully General Motors into throwing in the towel.

The result is that General Motors will make much bigger profits in Australia than before, fewer Australians will be employed, what’s left of Australian manufacturing will no longer be an early adopter of the latest manufacturing technology and the country’s trade deficit will climb ever higher.

Elizabeth Cruze. RIP.