Holden and Toyota to Dissolve Australian Car-Making Joint Venture

Strategic Insights -

The joint venture between Holden and Toyota, which shared car designs, engineering, and marketing, is set to come to an end as both companies seek to implement globalization strategies. The move is seen as a strategic decision by both motor manufacturers to integrate their subsidiaries more fully into global operations. Industry sources indicate that Holden stands to gain more from the dissolution of the joint venture than Toyota, citing substantial profits of $162.26 million for 1993-94. The separation of the two companies is expected to have significant implications for the Australian automotive industry.

Key Takeaways:

  • The joint venture between Holden and Toyota, United Australian Automotive Industries Ltd, was formed in 1987 and completed in 1992, but has been plagued by disagreements and poor buyer acceptance of badge-engineered models.
  • The partnership shared design and engineering, but retained separate marketing and dealer networks, with consensus on pricing and the sourcing company having the bigger say.
  • Holden retained its engine manufacturing and sales business, while Toyota retained its four-wheel-drive and commercial vehicles, with each company benefiting from the other's export credits and market share.
  • Industry sources say Holden has more to gain from the dissolution of the joint venture than Toyota, citing Holden's substantial profits and plans to bring in the Vauxhall Vectra to compete with the Ford Mondeo.
  • The separation of the two companies is expected to eliminate Toyota from the large six-cylinder segment, as Holden would rather sell Commodores with Holden badges.
  • Holden's production rate is 484 units per day, with about 45 Lexcens being built, which Holden would prefer to see with Holden badges.
  • The dissolution of the joint venture is seen as an example of the maturity of the Australian automotive industry, with Industry Minister Senator Peter Cook welcoming the move.

Statistics:

  • Holden's profits for 1993-94: $162.26 million after tax.
  • Holden's daily production rate: 484 units per day.
  • Number of Lexcens built per day: 45.
  • Expected increase in Holden's profits for the next reporting period: higher than $162.26 million.
  • Year of completion of the joint venture: 1992.
  • Year of formation of the joint venture: 1987.
  • Year in which the partnership was announced: 1987.

Sources:

  • Senator Peter Cook, Industry Minister: quoted in the article as welcoming the separation of Holden and Toyota.
  • Mr. John Conomos, senior executive vice-president of Toyota Australia: quoted in the article as admitting Toyota would be in loss for some time yet.
  • Toyota spokesman: quoted in the article as saying the climate had changed markedly since the joint venture was first planned.
  • Industry sources: quoted in the article as saying Holden has more to gain from the dissolution of the joint venture than Toyota.