General Motors just announced it is retiring the Holden brand forever. This is what killed the iconic Australian car maker.

Jack Derwin
  • Holden was retired by its owner General Motors (GM) on Monday, with the company saying it could not make the brand profitable.
  • It marks the end of the brand's death spiral, which stopped manufacturing cars in Australian in 2017.
  • Holden, and the Australian auto industry as a whole, had been weakened by a number of different factors from falling import tariffs, a flood of cheap cars from Asia, changing consumer tastes, and the withdrawal of government support.
  • Visit Business Insider Australia’s homepage for more stories.

Holden's death may have been quick in the end, but its demise was long and painful.

The decision by General Motors (GM) in Detroit to 'retire' the iconic Australian brand was revealed on Monday, ending its 164-year run. It came a little more than two years after Holden produced its final Australian-made vehicle at its Elizabeth factory in Adelaide's north.

While many Australians will remember the brand fondly, Holden's end was likely set in stone years ago. While GM on Monday blamed the decline of its overall right-hand-drive business, there's plenty of other culprits when it comes to what killed Holden.

Changing consumer tastes

While the iconic Holden Commodore might have cut a mean figure, sedans had been falling out of favour with the public for years before Holden shuttered its Adelaide plant. Instead, small cars, high-position SUVs and utes captured the consumer imagination instead. In 1998, more than 217,000 Commodores were sold in Australia. Last year, it had fallen to less than 9,000.

Cheap Asian cars and falling tariffs

As consumer tastes changed, so too did the global economy. As countries struck trade agreements and the world became more globalised, Australia's trade barriers began falling in exchange for greater access to overseas markets.

The result was protectionist tariffs were cut, effectively slashing the price of imported cars, especially from top-selling Asian carmakers like Mazda, Hyundai and Kia. Australians suddenly had more choice and financial flexibility than ever before to buy foreign-made cars instead of locally-built brands like Ford and Holden. There are more car brands for sale in Australia than the US, mainland Europe, Japan and the UK, according to News Corp.

Perhaps no agreement was more significant than the one Australia made with Thailand in 2005, which is the second-biggest carmaker outside of Japan. It's little wonder why – Australian auto workers simply wouldn't accept the $2 an hour that constitutes the minimum wage in Thailand.

Not only could it produce cars more cheaply, but the Thai market wasn't interested in purchasing large Holden and Ford cars, which despite also not incurring tariffs, were slapped with higher registration costs and a discrete tax that discouraged sales.

An Australian dollar that roared above parity with the US dollar for three years hardly helped overseas sales either.

The withdrawal of government support

While changing tastes and economies certainly weakened Holden, it was the withdrawal of government subsidies that broke the camel's back.

In 2013, Holden made a case to the newly-elected Abbott government for government assistance. While never publicly disclosed, the exact figure was reportedly between $150-$265 million to guarantee the building of the next two Holden models in Australia.

Abbott, flanked by then-Treasurer Joe Hockey, would go on to hand down the 'lifters, not leaners' budget, hardly the types to entertain government support of an ailing industry.

"There's not going to be any extra money over and above the generous support the taxpayers have been giving the motor industry for a long time," Abbott said in early December 2013, demanding Holden to make its intentions clear.

A few days later General Motors announced Holden would stop building cars in Australia. Toyota, another big employer of Australia auto workers, would close its own operations just two months later, putting the final nail in the local auto industry, and put some 50,000 jobs on the chopping block.

Some, unsurprisingly, are still questioning whether successive Australian governments couldn't have done more.