Without radical action, the end could be near

Posted on August 25th, 2008 in Automotive News,Driving Emotion,Global Warming,Hybrid Power by Julian Edgar

I am starting to wonder if the problems that Ford and Holden are facing in this country with their large cars – the Falcon and the Commodore – are going to be possible to remedy.

Holden is now talking a whole range of environmental and fuel-efficiency measures – from E85 compatibility to reducing weight – and Ford, despite having just released a brand new model, has already made public the next engine option, a diesel.

As I have written previously, both companies have only themselves to blame for their current woes – they were happy completely ignoring the changing marketplace and blindly heading down an ever-increasingly irrelevant path. It’s obvious they expected the market to change to suit them, rather than build cars that suited the buying public. That applies especially to Ford, a company that with the FG Falcon, had years more time to prepare for the changing times than Holden had with the VE Commodore.

But what makes me think that they may have lost it big-time is what I am seeing more and more: Holden and Ford are rapidly losing their loyal long-term potential car-buyers.

Now, self-evidently, they have lost some of these already; otherwise Ford wouldn’t be sacking production workers and releasing a market-special FG seemingly only minutes after the new Falcon was released; and Holden Commodores wouldn’t be being outsold (let’s talk private buyers) by a helluva lot more than just a couple of other car models.

But my comment on losing potential buyers long-term is much more anecdotal in evidence.

Never in my life have I seen so many people saying of current Falcon and Commodore buyers that they’re all just ‘bogans’.

A bogan is defined here as thus:

BOGAN (pronunciation boe-gn) is a term used primarily in Australia to describe a particular section of the working class demographic.  This derogatory slang word is a gender-neutral noun; this being important as many bogans tend to gravitate towards one another forming relationships and extended families.  A bogan family is not an uncommon phenomena in certain regions.  A bogan typically resides in either a low-cost housing estate, government housing or in the outlying regional areas of continental Australia.  Generally bogans tend to congregate in areas with little or no features & amenities.

Bogans have always been big buyers of Holdens and Fords. But now, since most families are deserting these cars, the observation is much more cutting. It’s especially interesting because, along with the equally scathing ‘Falcodores’ generic term, it is being applied by such a large variety of buyers of other cars.

In the distant past, people who bought Alfas and BMWs and Renaults and Peugeots used to think (and often refer) to Commodore/Falcon owners as ‘bogans’. But now the name-callers are also Lancer and Mazda 6 and Honda Euro and Subaru Liberty pedallers; people who would have been erstwhile potential Falcodore buyers.

So  this class of Japanese car buyer is now also deserting the big Australians – and not just deserting them, but being actively contemptuous of them.

It’s starting to get lean pickings, isn’t it? You can almost classify all new car Falcodore buyers as those who care little for fuel economy and a lot for performance (and then they’re getting fantastic buys with the V8s and turbos), government fleet buyers, company fleet buyers, and just a relative smattering of long-time loyal family buyers.

And with the upcoming release of the Australian-built hybrid Camry, it’s going to be a bloody brave government or large company buyer that doesn’t lean towards the hybrid: there will be too much shareholder and electorate credence to be lost by buying a thirsty six when the hybrid four serves just as well in fleet duty and emits so much less greenhouse gas emissions.

In fact, apart from those private performance buyers, just who the hell will be left buying Falcodores? The police forces, for one. Taxi drivers, for another. That would put the cars into the class of the Crown Victoria in the US.

‘Cept our Australian market isn’t big enough to support such cars.

I think that to cut-through current perceptions, Holden and Ford are going to have to take massive gambles. In fact, I think the change needs to be as great as last occurred in 1986 with the VL Commodore.

Back then, the Federal Government legislated for the mandatory use of unleaded fuel. The Australian manufacturers – and especially Holden – were faced with a huge battle to make their engines run on this strange, new-to-Australia brew. In fact Holden gave up – the old ‘Black’ motor just couldn’t do it. So they went shopping, and ended-up with a SOHC 3-litre engine (and 4-speed auto) sourced in crates from Nissan.  Along with turbo and 5-speed manual versions, under the bonnets of the VL Commodore they went.

There is no way in the world that the driveline would have happened at that time in a Holden if the company hadn’t been over a barrel – and no one can now deny that the VL was a massive success primarily because of its Nissan components.

I think that unless Holden (and Ford) bite a bullet of similar magnitude, they will be sunk. Those who sneer at Commodores as being fit only for bogans are not going to change their views because a Commodore loses maybe 50kg. They’re not going to look at a Commodore with new eyes because it can drink E85. They’re not even going to look at a brand new FG Falcon model because there’s an option pack made available at no extra cost.

Nope, to make an impact, these companies need to make radical changes.

A Commodore with the 2.8 litre V6 and the GM hybrid system. Or a Falcon with a downsized V6 and liquid LPG injection. Both companies have the technology available – GM right now and Ford very shortly.

In much the same way as the Federal Government drove change in 1986, the availability of the Green Car fund and the bludgeon of the Bracks report might be enough to make the push become a shove; that’s especially the case with newly-installed Senate independents who are likely to be positive towards funding a massive green transition.

If Holden and Ford don’t choose to make radical changes, I think that their time as Australian car manufacturers is coming to a close.

25 Responses to 'Without radical action, the end could be near'

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  1. Chris said,

    on August 25th, 2008 at 7:19 am

    Ford already have parts-bin access to the twin-turbo V6 HDi diesel that’s fitted to Jags and the Citroen C6. I’m sure it would fit nicely in the Falcon engine bay.

  2. Ford Man said,

    on August 25th, 2008 at 9:09 am

    A fight for their lives indeed.

    Julian you have read the market correctly, unlike the local OEM product planners. Sadly, Ford and Holden are in terminal decline. Government assistance will probably keep the plants running for another 5+ years.

    Anyone waiting for the PSA V6 Tdi to save Ford is going to be disappointed, the engine is just too expensive. LandRover Discovery 3 charges a $10K premium for diesel. Think that will wash with local ford buyers?

    Another interesting article on the state of the australian car industry;

    And globally:

    Hope I’m wrong.

  3. Luke Konynenburg said,

    on August 25th, 2008 at 1:35 pm

    Julian and all.

    I fundamentally agree that there was something of a lack of foresight displayed by Ford, Holden & Mitsubishi – but I would like to make two points:

    1) for better or worse, automotive product development lifecycles are long – 5+ years. In January 2003 (I just looked up our old Fuel records – I run buses and coaches), we were paying 88.5 cents per litre for unleaded (pump price). We knew fuel would go up, but certainly couldn’t predict the degree, and it’s unrealistic to expect car manufacturers to have been able to; and

    2)Sales of ‘Falcadores’ are not down because of global warming concerns or fuel prices…. In 2007, Light Cars (Yaris etc.) only grew 0.9% more than the market, and small cars (Corolla size) lost ground (6% growth versus 9.1% for total market)! In the same period, the off-roader segment grew 15% (Source: VFACTS). People today have more freedom to choose their vehicle (novated leases etc), and the reduction in tariffs has meant that the value equation for the Aussie Big 6 is not so clear cut – and yes, people see them as bogan or repmobiles. You should at least give Ford a nod for having the foresight to build Territory (not from an ecological P.O.V. – but a strategic one.

    In addition, (OK – three points!) there is far more margin to be made selling a large car than a small, as I think we’ll find out when Ford try to build the Focus here… I suggest that the choice the local manufacturer’s truly face is not whether to build a big car OR a smaller car, but whether to build a big car or nothing.

  4. Julian Edgar said,

    on August 25th, 2008 at 2:09 pm

    http://www.theaustralian.news.com.au/story/0,25197,24187806-28737,00.html – that’s the best article I have ever read on our local car manufacturing industry

  5. Scott said,

    on August 25th, 2008 at 2:11 pm

    Reckon LPG is the way to go.

    I used to have an LPG Falcon XT as a work car. Even with the fuel crisis on, it would only cost $45-50 per week. I would generally get 500-500km out of a tank per week (city/hwy driving).

    Diesel is too expensive when you factor in the extra cost of the desiel and servicing.

    If Ford could find 3.5L engine, they would be on a winner.

  6. Morgan said,

    on August 25th, 2008 at 5:22 pm

    Could it be that the best alternative to a Falcodore (even for taxis) is already sold by Holden??? Our local newspaper car guy agrred with me that if he was a taxi driver it’s what he’d buy…What is it…why the Epica diesel of course. It’s about VL size, about VL power (but heaps more torque) and much more economical than any Commodore.

  7. Dean said,

    on August 25th, 2008 at 7:37 pm

    Not when the Ford Mondeo is a better car (although more expensive).

    Another thing to consider is that the midsizers have grown to nearly Falcadore size anyway. A Mondeo sedan is about 5cm shorter than a Commodore. Considering the lower purchase price, likely better resale values, and better fuel economy (especially the diesel), it makes the Mondeo a no-brainer, along with the other midsizers.

  8. Mitchell said,

    on August 25th, 2008 at 9:08 pm

    Wouldn’t a 2 litre diesel do an adequate job? Ford and Holden should look at vehicles such as the BMW 520d,and in Europe you can get a Skoda Superb with a 1.4L TFSI engine. Im sure we’ll see them in 10 years ( if the industry survives).

  9. turbin said,

    on August 26th, 2008 at 8:12 am

    “that’s the best article I have ever read on our local car manufacturing industry”

    Very good indeed.

  10. Gordon Drennan said,

    on August 26th, 2008 at 10:41 am

    There’s an old story about a lost motorist who stopped to ask a farmer how to get where he wanted to go. After trying half a dozen explanations that were all too complicated for him to explain and the confused driver to remember the farmer eventually announced “well, now that i think about it, you can’t get there from here”. In other words, go home, and it if you really want to get there, start again, and this time do it right. When companies realise that they’re in that situation they sack everyone and outsource. Then quietly start again.

    We can’t fix Holden and Ford Australia. They can’t get from where they are now to where they need to be. They have been following a road that goes in the wrong direction for too long. They are too entrenched in going the wrong way at every turn. Their management culture is wrong. And you can’t change that. The only way forward is to let them die, and if we want a car industry, to start again.

  11. Jason said,

    on August 26th, 2008 at 10:42 am

    I don’t see the Camry Hybrid knocking over the local industry – in the short term at least. The press reported Toyota would be building only 10 000 of them a year. Compared to a local manufacturing output of what – 200 000 according to The Australian?

    So, fleets might want to buy them, but they’re going to be in relatively short supply. In the short term, anyway…

  12. Ford Man said,

    on August 28th, 2008 at 12:03 pm

    2010 No diesel falcon, but better LPG:


    2012 / 13 / 14 No Ford global rear wheel drive. Next falcon to be based on Mondeo?


    What do you think Julian. Radical enough?

  13. Ford Man said,

    on August 28th, 2008 at 12:15 pm

    SAE recognises need for urgent overhaul of OZ car industry. Or not…


  14. Julian Edgar said,

    on August 28th, 2008 at 12:21 pm

    A dedicated liquid LPG Falcon with a power output designed to give adequate (not sports sedan) power – and so deliver very good fuel economy – would be good.

  15. Julian Edgar said,

    on August 28th, 2008 at 12:23 pm

    The SAE-A gave an award (gold?) to Mitsubishi for the 380’s engine….

  16. Ford Man said,

    on August 28th, 2008 at 1:36 pm

    380 engine – 2005 SAE-A silver award.

    It is as though SAE-A pride themselves on being divorced from commercial reality.

    The viability of local assembly of the Focus and Mondeo is questionable. Local sales will have to rise significantly from their current levels. Last month Focus 1327 vs Corolla 3668 and Mondeo 309!!!! vs Camry 1933. Perhaps the next generation models and other variants like the SUV Kuga will help but it seems a stretch.

    Holden had a brief go at local assembly of the Vectra with disastrous financial results. Admittedly fuel was a lot cheaper back in the late 90’s which didn’t help the viability of mid size models.

    A decent LPG system in the Falcon would be great – but where is the car most Australia families could be driving, the LPG Territory?


  17. The Public said,

    on August 28th, 2008 at 8:24 pm

    I Think the problem is that for many private buyers the large sedan just doesn’t tick all the boxes anymore.
    For myself and my partner a new car buy would have the following requirents
    1) Must have 4 doors
    2) Must be a hatch or wagon (for carrying stuff)
    3) Must not be manual
    4) Must have some sort of sportyness or image (i.e not a camry) also rules out most 4wd’s
    5) Easy to park /get in /see out of.
    6) Capable of traveling long distance.

    Now in locally built cars the only options that satisfy the above is the new sportwagon. And it is good. But… The owning and running cost is massive.
    Why buy a SV6 wagon when I can get a focus zetec or lancer hatch vrx (when it comes out) for at least $10-15K less. Plus the ongoing cost of fuel is 1/3 less. 99% of the time it will be carrying no more than 2 people and for that 1% time it will it’s perfectly adaquate. At the end of the day we just don’t need the space.
    If less money was available a mazda 2 would be an acceptable compromise.

    A long time ago large car buyer’s wouldn’t cross shop with something smaller because you really lost out on comfort / performance / convience. That’s just not the case anymore.

  18. Garage Man said,

    on August 30th, 2008 at 3:02 pm

    I have said this before, and will say it again. The reason why people no longer purchase as many large cars is most probably due to the fact that Australia’s demography have changed in the past decade. Australians, in general, have become wealthier, more worldly and less children are growing up to become Ford/Holden traditionalists. Aggravating this is the fact that, as a result of the decrease in the number of children per family, there is no longer a NEED for the huge space large cars have to offer. During the heyday of the large Aussie cars, affordability was the huge factor in their successes, and extra purchase costs over a smaller car was EASILY justifiable. However, with the advent of technological improvements and physical growth within the small/medium car segment, the appeal of large family cars have diminished, to say the least. Also, the bogan image the family cars still somehow portray seems to be a huge psychological factor in unwilling buyers. Unless the Falcon/Commodore is able to somehow offer a significant economy/value advantage over smaller cars, I don’t see the decline of Ford/Holden ending any soon.

  19. Leroy said,

    on August 31st, 2008 at 12:40 pm

    Here is a suitable hybrid engine/drivetrain.


    I think is would suit the requirements of the customers – low fuel consumption/emissions, yet with significant performance and the perception of ‘grunt’. It would likely meet the engineering requirements as well, it comes from a similarly large, heavy car and packaging should be okay.

    Oh, and ironically it comes from a nissan skyline 🙂

    So Holden you know what must be done, remember as Julian has reminded us, how good the VL commodore was.

    In any case this will be a very interesting hybrid development in the nissan G35.


  20. Mike said,

    on August 31st, 2008 at 3:03 pm

    some of us happen to be willing to pay more for fuel because we enjoy driving nice cars

  21. Jay said,

    on September 1st, 2008 at 9:14 pm

    “some of us happen to be willing to pay more for fuel because we enjoy driving nice cars”

    So you don’t drive a Holden or a Ford then.

  22. Mitchell said,

    on September 10th, 2008 at 3:27 am

    All this is overlooking one HUGE fact- The Holden Commodore is still selling extremely well, and doesn’t seem to have copped any MAJOR hit, like the Falcon and Aurion has. It has been going strength for strength, and its popularity seems at odds with expert predictions.
    August 2008 figures for the Commodore even beat the equivalent of 2007!
    I can only imagine the rumored adoption of a direct injection 3.0litre V6 will see it soar further.
    That mere fact proves that there is life in the segment yet, although I agree drastic change needs to happen.
    While I acknowledge the Falcon is the best overall car in the segment ( segment beating fuel economy has been acheived in road tests), there is a major perception issue preventing it from losing ground. But Commodore proves it is still possible to win in this segment, so all this talk of abandoning it seems too drastic.

  23. Ford Man said,

    on September 10th, 2008 at 4:08 pm

    Commodore sales to end of Aug this year 33,043.
    Commodore sales to end of Aug last year 40,116.
    Source Vfacts.

  24. Mitchell said,

    on September 11th, 2008 at 1:04 am

    I see…Well it’s still in a sustainable position…for now.

  25. Architectonic said,

    on October 2nd, 2008 at 8:06 pm

    We might not have a choice whether to continue production of ‘Aussie cars’ – look at the situation of GM and Ford in the USA.