Australian RWD Large Cars Being Driven to Extinction

SYDNEY – The iconic 63-year history of the traditional Australian family car looks certain to end before the current decade is over.

The once hugely successful formula – a front 6-cyl. engine driving the rear wheels, as embodied by the home-grown Holden Commodore and Ford Falcon – is a victim of falling sales, increasing globalization of new-model development and tough new American fuel-economy standards.

The numbers reveal a painful reality: Neither Ford Australia nor GM Holden can justify the expense of a re-skin of their existing models, let alone development of all-new versions of their local best sellers.

The Falcon’s 29,516 sales in 2010 were down a massive 60% from 2003’s 73,220, according to the Australian Federal Chamber of Automotive Industries, finishing behind the Commodore, Toyota Corolla, Mazda3 and Hyundai i30 for a fifth-place finish, it’s worse-ever result.

The Commodore remains Australia’s best-selling large car with 45,956 deliveries in 2010, albeit an 47% drop from 2003 when it sold a record 86,553 units.

The first to go will be the Falcon. Sometime in 2016 or 2017, the Falcon and Ford Territory SUV rear-wheel-drive models will be replaced by the next-generation front- or all-wheel-drive Taurus fullsize sedan and all-new Explorer SUV, both of which were engineered and styled in America.

At this stage, not even Ford knows if the 51-year old Falcon nameplate will be retained in Australia or if either new model will be assembled at Broadmeadows.

The parent company’s confidence in its One Ford strategy simply doesn’t allow for development of any more single-country orphan models beyond the life of the current FG-generation Falcon and Territory.

One Ford strategy doesn’t allow for development of single-country models such as Falcon.

Three times over the last 50 years, Ford Australia has resisted pressure from the head office in Dearborn, MI, to adopt one of Ford’s American or European big cars and instead gone its own way. But no longer. In the future, Broadmeadows will conform to the One Ford philosophy.

With Falcon sales at an all-time low last year and only 11,558 deliveries of the closely related Territory, a re-skin of the existing architecture was never a viable option.

Nobody seriously expects this year’s Falcon upgrade, including a new turbocharged 4-cyl. engine and advanced direct-injection liquefied-propane-gas mill for the inline six, to substantially boost sales. Halting the decline will suffice.

Ford’s plan for a new global RWD platform, which included the Falcon, was abandoned three years ago during the U.S. auto maker’s cash crisis. With it went any long-term chance of the RWD Falcon’s survival.

Ford also has rejected the logic of combining the Falcon with the next Mustang, due in April 2014. Instead, the new Mustang will be an evolutionary development of the existing model, even down to retaining a live rear-axle suspension.

J Mays, Ford’s global design chief, told Ward’s at January’s Detroit auto show: “A new rear-drive platform is not currently in our plan. We’re doing a lot more homework on other stuff – trying to sort out the best front-drive platform to use globally. That (work) does not include rear-wheel drive.”

Holden Commodore Oz best-selling large car, despite 88% drop from record 86,553 sales in 2003.

Mays went further in confirming the move to FWD and/or AWD for its Australian large car. “I wouldn’t be holding my breath for a rear-drive Falcon,” he said at the time. “I think the chances are we will be all-wheel drive.”

Officially, Ford claims the decision will be made in the next six months. However, company insiders tell Ward’s the move to American-based models is only a formality. Ford is desperately in need of a new large-car architecture that accommodates FWD for base models and AWD for premium versions.

The ’10 Ford Taurus, still loosely based on the first-generation ’98 Volvo S80, lacks competitive interior room. And because it is heavy, performance and fuel economy only are average – ironically, way behind today’s Falcon.

It’s understood a new, lighter architecture for a raft of future Ford and Lincoln models is in the early planning stages in Dearborn.

The impact of the stricter 2016 U.S. corporate average fuel economy standards further raises the stakes and virtually eliminates the possibility of the less-efficient RWD platform on Ford’s mainstream large cars. Ford Australia also is wrestling with the implications the move away from RWD will have on the Falcon’s performance image and the future of its Ford Performance Vehicles division. Long term, the potential direction of the parent’s global powertrain development is far more likely to be turbocharged 4- and 6-cyl. engines, rather than V-8s.

GM Holden, too, understands how important rear drive is to its HSV performance lineup.

Sadly, on current sales figures and without strong exports, finding a way to retain the uniquely Australian models is going to test both auto makers’ ingenuity like nothing before.

From 2016, U.S. auto makers must average a combined 35.5 mpg (6.6 L/100 km) across their range of cars and trucks, with cars set at a miserly 39 mpg (6.0 L/100 km). Americans still may want big SUVs and trucks, but the government’s approach is forcing the manufacturers to make notably smaller vehicles.

Today, the Commodore’s best combined fuel economy number is 25.9 mpg (9.1 L/100 km), while the Falcon’s is 29 mpg (9.9 L/100 km).

GM Holden’s mid-term target for the next Commodore, due in 2012-13 is “mid-8s,” still shy of the American regulations and one reason why, with the Oz dollar at parity, exports to the U.S. no longer are sought.

The future of the Commodore is more ambiguous. The new General Motors, fresh out of bankruptcy, has divided its global engineering operations into three “homerooms” – the U.S., Germany and Korea – pointedly ignoring Australia.

Sources indicate further development of the RWD Zeta architecture, created in Australia and launched in 2006 to underpin the VE Commodore, long-wheel base WM Caprice and, later, the Chevrolet Camaro, will shift to Detroit.

Look at the numbers. Chevrolet moved 81,371 Camaros last year, 14,000 more sales than all of Holden’s local models combined.

The long-term implications for GM Holden’s engineering staff, already slashed by redundancies in 2009 when the subsidiary lived from day-to-day and even briefly considered selling its Lang Lang proving ground, are massive.

However, GM remains committed to operating a design studio in Australia. Mike Simcoe, father of the VE and recently appointed executive director-design for GM International Operations, which includes the Australia and Korean studios, says about 70% of GM Holden’s current design workload is for overseas models. GM insiders claim shifting the Zeta II to Detroit enables the easier development of high- and ultra-high strength steels aimed at reducing the architecture’s mass by at least 221 lbs. (100 kg).

The Zeta II will underpin the next Camaro and, if GM Holden can develop a profitable business case, an all-new RWD model for 2018. “Zeta will run for as long as people buy them and we keep it fresh,” says Mark Reuss, president-GM North America and former Holden boss. The alternative is one of the global variants based on the FWD Epsilon II platform currently used for the Opel Insignia, Buick Regal and LaCrosse.

One potential candidate is the next Chevrolet Impala sources say easily could be turned into a badge-engineered Commodore replacement.

However, Holden Managing Director Mike Devereux favors the continuation of rear drive for the generation-after-next Commodore. “We have to make sure it is a real Commodore that is right for Australia,” he says.

“We’ll be making the call in the next six to 12 months, and it sucks having to make the decision so far out.”

Says Devereux’s boss, Tim Lee, head of GM international operations: “Country by country, business plan by business plan, GM needs to be profitable. We war-game everything.

“Over the next 18 months, we need to figure out how to keep (the) Commodore at the top,” he adds. “We need to make it relevant. The package is going to be smaller and lighter – the environment is becoming increasingly important – when gas prices are forcing us to look five to 10 years ahead.

In other words, in the world of the new GM, the Holden operation must fund its own new-model development program. The years of Detroit’s financial support are over.

GM Holden is planning a major facelift, somewhat shy of a re-skin, of the existing VE model in 2012/2013. Devereux says tooling a new body shop for an all-new ’18 model will costs about A$250 million ($254 million). That’s money Holden does not have.

Nor can the auto maker look to exports to help prop up its bottom line. Five years ago, GM Holden’s business case was based on 50% exports, but parity with the U.S. dollar has decimated sales. In 2004, GM Holden produced 165,252 cars at its Elizabeth, South Australia, plant, more than double the figure for 2010. Since then, exports have fallen from a peak 60,518 units in 2005 to just 7,817 in 2010, largely as a result of the strong Australian dollar.

“Exports are no longer part of Holden’s business plan,” Devereux admits. “That doesn’t mean we don’t want to export cars, just that exports are a bonus. Holden has to be absolutely set up to be profitable in Australia. We don’t want to be relying on exports.”