Holden could be sold as GM goes into 'death spiral'
Robert Wilson
March 25, 2006
HOLDEN could be sold off if a desperate General Motors continues to fall into a financial death spiral, a global automotive expert says.

The principal of international automotive strategic consultants Autopolis, Graeme Maxton, said GM was already taking desperate measures to avert the greatest crisis in its 98-year history and sell-offs of its better performing divisions couldn't be ruled out.

"If you look at in terms of pure economics, their investment in Australia must be under question," he said yesterday.

"GM is having to sell off the family silver and close down anything that is not economic to cut costs in order to survive for the next few years," he said.

The Detroit-based automotive giant had already begun disposing of its shareholdings in Japanese makers Isuzu, Subaru and Suzuki, despite these being strategically significant ventures, Mr Maxton said.









And GM yesterday announced it had sold its property financing arm, GMAC Commercial Holding, for $12.5 billion.

"All of these are desperate measures to stay alive. What GM is waiting for is when enough of its pensioners die off that it can re-fund itself and invest for growth again. But it's absolutely hidebound right now. It has so much debt and so many liabilities that it has to simply cut them loose," Mr Maxton said. "They can't do anything until their situation improves but they've got themselves into something of a death spiral because the more they have to cut, the more consumers stay away from their products, the more their market share goes down and the more their losses go up."

Mr Maxton acknowledged Holden was not in the same dire sales situation as GM's US brands whose combined market share fell to a historic low of 25 per cent last year. But he said that the more profitable Holden was, the more tempting it would be for GM to sell it off.

"The question for Holden is who would buy it. There are actually not many companies except maybe a Chinese maker who would buy it right now," he said.

GM's traditional global rival, Ford, was in just as much financial trouble, Mr Maxton said.

"Ford is in many ways in exactly the same situation. The big difference is that GM really does understand how serious its situation is," he said.

"Ford is still pretending it's not that serious but their market share has fallen even more than GM's. The company hasn't woken up to what it has to do."

The cycle of cutbacks and rationalisation that threatened Holden also applied to Ford Australia, Mr Maxton said.

"It's absolutely the same situation but it may take a bit longer because Ford headquarters is in denial," he said.