- Almost 1 in 3 new cars in 1990 was a Holden.
- Holden lost market domination in the late 1990s.
- Panicked and chasing quick sales to make a profit, Holden pursued a strategy of cheap, low-quality products to compete.
- In the mid-2000s, Holden quickly launched multiple products in a short amount of time to win back market share.
- Holden failed to align the brand promise with product reality.
- By the mid-2010s, customers had become disillusioned and no longer believed in the brand.
- Sales continued to slump, now significantly.
- By 2017 Holden made a desperate attempt to compete by launching 24 new vehicles in a 3 year period.
- Holden failed to have one product dominate any market segment.
- Holden failed to position to differentiate and deliver on the brand promise.
- In 2020 Holden was ‘retired’ from The Australian and New Zealand market.
Read the detail… learn the lessons… don’t repeat the same mistake.
Keep reading to view the full article, or listen to the podcast episode on the Brand Transformation Show:
Holden shut down by General Motors
The 17th of February, 2020, is a day that will go down in history for anyone involved in business within Australia and New Zealand.
Following a litany of retail ‘collapses’ as disruption hit the retail sector in 2018 and 2019, one of Australia’s most well known and oldest automotive brands announced their ‘retirement’.
Retirement? Let’s say it acknowledged its own death.
General Motors has announced the end of the Holden brand in Australia and New Zealand.
How could this happen?
How could one of Australia’s most well-known brands get it wrong?
So wrong, they are prepared to walk away from a marketplace that sells over 1,000,000 new cars a year and transacts a further 2 to 3,000,000 used cars a year.
On a per-capita rate that’s actually a great car market, even though the volumes are small.
When big businesses close down, there will always be a complex web of reasons why. Journalists and commentators are going to be writing about Holden for decades.
As a brand experience consultant, my interest is in the brand insight.
Here’s the big idea…. Holden failed to close the brand gap.
That’s what this article is about.
There might be a host of reasons why General Motors want to exit their capital out of Australia but at the end of the day all those reasons will fall under the simple principle – Holden failed to close the gap between brand promise and brand experience.
What’s a brand gap?
A brand gap is the difference in ‘who we are as a brand’ (brand character – internal culture, behaviours, systems), ‘who we say we are as a brand’ (advertising and communications), ‘who our customers say we are as a brand’ (customer beliefs, reputation) and who we need to become as a brand.
Somewhere in the vectors of who we are, who we say we are and who our customers say we are and who we need to be, is the truth of who we are.
The Blirt Brand Gap
This difference is what’s commonly known as the brand gap. A gap in beliefs, perceptions, thoughts, ideas, personality, principles, purpose…..
Fast fact for the comfortable brand manager reading this.
Every brand is in a brand gap, everyone. Yes, that means you too.
This is about Holden so, let’s go back into the story.
Holden in the 1990s
Let’s go back in time….. not to the genesis of Holden, a saddlery in the 1850s but to the loud vibrant 1990s.
In the 1990s just as Wilson Phillips is belting out ‘Hold On…..just one more time’ the car brand Holden is going from strength to strength.
Yes, thank you to all those that got the ironic pun.
In the 1990s, market share for the Holden brand rose from 21 percent to over 28 percent. Holden is manufacturing Australia’s best-selling car and exporting it in significant numbers.
By the end of the decade, and the turn of this century, the business was starting to go downhill for Holden. In less than 5 years, what seemed like a dominating position at the top of the car industry began to crumble. Market share had plummeted by 50%, down to 15% in 2006. When any brand goes into freefall with increasing price competition, panic is likely to kick in.
In my view, here is where the problems started. The first big brand gaps had their origins in the early 2000s as Holden took the view that cutting production costs was the key to maintain sales leadership.
1/ Cost of living pressures, especially the ongoing headline of rising petrol prices, was impacting the traditional V6/V8 passenger car sales, a segment Holden owned.
2/ New smaller, low-cost cars were appealing to youthful new car buyers. Asian brands like Hyundai and Kia were gaining market share, showing they were real competitors.
3/ New entrants in the marketplace were focussing on rising trends of mobility and were faster to market with technology integrations to allow younger buyers to connect iPods and emerging smartphones.
When market share falls, fix the product, don’t cut quality.
Unfortunately, General Motors appeared to take the view that production cost efficiency was the path out of sales declines.
In the early 2000s, Holden’s product development was a well-entrenched process of taking cheaper models out of Opel to feed a manufacturing engine. This then shifted to Daewoo when GM upped its investment to a 70% ownership of the South Korean brand.
This enabled a rapid, panicked product strategy in response to the decline of V6/V8 passenger cars and the rise of small cars and SUVs.
From 2005 to 2010, Holden:
- Rebadged the Daewoo Kalos as the Holden Barina
- Replaced the Viva with the Holden Astra
- Introduced the Holden Captiva, dropped the Frontera and Jackaroo
- Replaced the Vectra with the Epica out of the Daewoo product book
- Lost the Rodeo to Isuzu and relaunched it as the Colorado
- Introduced the Holden Cruze as a direct import from Daewoo unchanged.
Within 5 years, and to set up this last decade of sales, Holden had assembled a hodgepodge mix of products pulled together with a focus on ‘cheap’ to compete.
They’ve also dropped two quintessential Australian names: Jackaroo and Rodeo, replacing them with a mix of European and American names. On its own, this sell-out of cultural connection is likely to have irritated many thousands of Australian buyers.
In Holden’s own words they believed success came from great service and cheap products;
“Australia has one of the most competitive new vehicle markets in the world, in both model proliferation and price. More than 50 brands with over 350 models combined are vying for sales of approximately 1.1 million vehicles per annum. In this strongly competitive environment, a brand will not survive if it does not provide excellent service to customers and offer competitively priced products.” – Holden, ‘New Car Retailing Industry – a market study by the ACCC 2016’
The cavernous gap of brand beliefs was being put into action as these models were hitting the streets under powerful national advertising campaigns.
The product strategy even left different models of the Holden brand with conflicting user experiences on items such as cabin fit-out. There was no consistent brand experience like customers were used to with VW, BMW or Mazda. Where in the world Holden had ‘grabbed’ the product, determining how your cabin or steering column was set up.
Customers, now educated on UX (User Experience) as a function of the overall brand experience by new technology brands like Apple and Google are noticing this UX fail and social media was starting to light up.
At exactly the same time that Australians were putting more and more cultural content and identification into Anzac Day, Holden was de-Australianising the iconic Australian brand.
It became clear people weren’t buying Holdens, they were buying a cheap import with a Holden badge.
You are probably wondering, well, what’s the problem? Isn’t this what Hyundai and Kia and other Asian brands were doing too?
Aren’t cheap imports the secret to new car sales?
Why can’t Holden? Aren’t they meeting the market?
Yes but no.
The first problem is the dealer network is not making money. According to Holden’s own submission to the ACCC for the ’New Car Retailing Industry – a market study by the ACCC 2016’, dealers were making on average 2% margin across the Industry.
Let’s assume Holden’s market performance of average to below-average puts a lot of their dealers in the network on the wrong side of the ledger.
The second problem, and the primary topic of this review, comes when product development does one thing and marketing does something else.
In this instance, a brand promise that oversold a product reality.
The result, a gap appears…. and starts stretching out and out and out.
Marketing, sitting in an office in Australia needed to sell the Holden brand. So sell it they did, with gusto, clarity and lots of money.
The problem is the mismatch. The brand promise in conflict with product experience.
A Holden brand, deeply connected to the highly successful Commodore brand had failed to leverage equity into the small car segments and the SUV and 4WD Ute segments – which by now were growing rapidly.
Holden missed the emerging trends because it was distracted by falling sales.
The traditional mid-sized passenger car had gone from being a dominating segment of the industry to a quiet almost forgotten segment of the industry.
So, what did Holden tell the market?
By the way, it does feel cold to pull apart a brand with the gift of hindsight, but the lessons are important.
Here is what Holden was saying to the market.
These extracts are from their own Holden Brand Book:
Is everything you do driven by the desire to make the drive better? I don’t think so, the evidence doesn’t seem to stack up.
By making the drive better, do you really mean make the product quality cheaper?
Satisfaction does not equal advocacy.
Disclaimer: Personal bias here.
I didn’t think Holden was making my drive better when my Holden Cruze was on fire, on the side of M1, late one night driving home from Brisbane airport.
Kudos to Holden for replacing this at no cost.
This was the kind of good customer service that saw the Holden brand topping the 2018 customer satisfaction surveys.
However, satisfaction does not equal advocacy.
Care a lot about customer satisfaction. Care 10x more on customer advocacy. Solving problems and doing the right things keeps the customer satisfied, delivering quality and value builds advocacy.
Satisfaction means I’m satisfied with the sale that just happened (a lagging indicator), brand advocacy means I’m going to recommend or buy again (a leading indicator).
Was I satisfied Holden fixed a quality problem on a near new Holden? Absolutely. Very grateful, very satisfied.
Would I buy another new Holden? Not in a million years. I loved Holdens, my parents had bought at least 8 Holdens over the years, and I grew up aspiring to have one, got excited when the neighbours got a new one…. 20 years after buying two, my wife and I were out.
Perhaps not everyone had this experience, but perhaps a lot of customers were starting to have smaller moments of ‘gap truth’.
The promise did not match the product.
The promise must be real and deliverable.
What did make Holden, Holden – what did they believe?
These are big claims that are not backed up with customer’s shopping preferences.
2015 was the last time Holden held the no. 3 position in total sales.
Then sales started sliding.
This loss of trust saw no better evidence than the Australian Police reviewing fleet purchases for patrol and performance cars.
For 50 years, Ford Falcons and Holden Commodores in V6 and V8 configurations had been the choice to chase down the criminals driving …. you guessed it, high-performance Ford Falcons and Holden Commodores.
Not only the police, but even criminals were choosing new brands.
But back to Holden’s brand book to educate their staff, dealers, and agencies what to communicate.
If, Holden, as you claim you do get Australians, does that mean Toyota, Mazda, Hyundai get Australians better? They are acting on the insights and producing cars that do meet Australian conditions and customers?
The potential for believing your own BS typically increases with the size of your marketing budget.
Where were the naysayers in Holden to call out big promises made on low-quality products?
Who was slamming their fists on the table standing up for the customer and building products customers would buy?
Leaders, who are you listening to that is probably a thorn in the side but might just be making some sense?
Shouldn’t Holden as a company hold the counter-cultural thinker up and support the idea of challenging the status quo…
They did… on paper…
Again, just because the marketing department put the message in a brand guide and push it out on touchy-feely ads doesn’t mean your team is being the brand.
Brand values have to be truthful. If aspirational, then fight tooth and nail to make them real. No-one, not even a CEO, VP or Board Chair should get in your way.
Shouldn’t Holden be making a promise and delivering on that promise with gusto…..
What was the promise Holden wanted to make to the customer?
What does that really mean? If I drive a Holden I win?
What do I win? What is the real tangible benefit of owning and driving a Holden?
I can get Toyota – quality and reliability, I can get BMW – driving pleasure, I can get Mazda – a cheap BMW imitation, I can get Hyundai – affordable quality, I can even get Kia – a sporty affordable (the alfa of SE Asia) and I can even get Mercedes – ego-driven excellence.
But Holden…. ‘Delivering cars that are exciting to drive’…. ’The car that gets Australians and designed for Australians’.
The gap between promise and product is now entering the middle of the Australian outback – a place no sane person would take a Holden.
They’re now trusting a Japanese Toyota for that job.
To win, focus, niche, focus some more.
Holden made a big strategic marketing error in 2005 and then repeated it in 2017.
As a no. 3 brand, you’re not in a position of leadership.
Leaders can defend with new products, expanding market segments and grow the base. No 3 brands with falling sales need to think like a start-up. Niche, flank, focus … focus… focus. No, I’m not talking about the Ford Focus.
You win back customers with a niche focus and deliver on the promise.
In October 2017, via AdNews, Holden’s director of marketing and customer experience Mark Harland, made a series of statements.
“…we need to identify ourselves as not just a fantastic new Commodore, we need to identify ourselves as an SUV company and a truck company and play in some segments that we may not have played in as much in the past.
“Buying a car is an emotional thing and we need to evolve to be a lot more customer-driven marketing company…”
(Regarding that last statement, I would suggest anything less is business suicide).
“We’re using different properties to talk to different people. They may still love supercars, they may love their sport, and we still have those properties to talk to those people.
“Then there are other properties that we’re bringing on board. As an example, we are big supporters of women’s AFL.
“So starting to look at talking to more women, bringing more young people into the brand. That could be through sport, that could be sponsorship, that could be through different diversity initiatives that we’re doing”, said Mr. Harland.
Let me just say I think Mark Harland had one of the toughest jobs in marketing trying to turn around Holden.
Not only would he be fighting accountants ripping the quality out of cars but also feeling the immense pressure to quickly rebuild Holden into the market leader it once was.
Holden, at the end of 2017 had just committed to building and launching a new portfolio of 24 new vehicles by 2020.
So, Holden was talking to… everyone, in almost every segment, with 24 new vehicle products, this time not in 5 years but now in less than 3 years.
WOW. WOW. WOW.
Does the panic to talk to everyone, within every product segment, super quickly sound familiar.
It certainly does, 2005 to 2010 is history repeating itself from 2017 to 2020.
Leaders…. acknowledge the corporate mistakes and learn from them, don’t let bad history repeat.
Had Holden lost who they were, had they lost the human touch, the desire to be authentic, warm and deliver on the unexpected….. ?
What did the hallowed pages of the Holden Brand Book say about being the brand?
Unfortunately, when brands need to document the need to be human and remind customers they ‘get you more than any other … brand’ whilst going through a sales free fall, there’s an odour of BS in the air.
Am I Holden bashing?
Am I picking on the poor people who have lost their livelihoods and incomes?
It’s easy with hindsight to see the breadcrumbs. It’s damn hard in the battle to see the blue sky for all the bullets whizzing by.
I feel deeply for the lost incomes, lost jobs, lost opportunities and lost hope that descends like a black cloud over these situations.
People matter. 10,000 people across 200 dealerships matter, hundreds of thousands of customers matter.
That’s why we need to talk about it.
That’s why the lessons on being true to who you are, what you sell and what your customer’s experience is so important.
Even 150-year-old brands can fail.
I’ve felt the gap at times in my own business and felt the ensuing cost.
I’ve seen the gap in clients and felt it as a customer of some of my favourite brands.
Every brand has a gap.
It’s our job to hunt the gaps, identify the solutions and close the gap.
If you’ve listened to our podcast, The Brand Transformation Show, you’ll learn the enemy is the gap – close the gap by keeping your eyes on the market and the customer.
We must learn the lesson that in time, the truth of who we are will be known and that brand character matters.
The only way to be, is to be true to who you are today and where you need to be tomorrow and the reality of what you do today.
The enemy is the gap.
Sadly, the billions the federal government spent on keeping Holden in the country have been wasted because the vision, strategy, market focus, product focus, and business model have been set by a small number of corporate executives who failed to listen to customers. They’ve pursued a strategy of cheap products with a highly valued brand image slapped on top.
It’s understandable but it’s sinful. It shouldn’t happen but it does.
Holden’s rot set in at the turn of the century. It took almost 20 years for the rot to destroy the 150-year-old brand. It was within the falling sales and the toxicity of rushed strategic thinking that the clarity of sound brand principles were lost.
The gap, the only enemy that existed, had won.
The General called the brand home to Detroit to sit in a cellar with a host of other gap beaten brands in North America.
Maybe one day an entrepreneur will buy the name out and do something interesting to bring it back to life.
Holden isn’t the first car brand to ‘retire’ and it won’t be the last.
What can you do about your own gap?
Firstly, don’t believe you don’t have one. You do. Just ask a customer, employee or supplier.
Secondly, work out what the gaps are. Is it in product quality as in Holden’s case? Is it in overselling the outcome like so many technology or financial brands have done in the last decade?
Thirdly, start to map the investments or divestments that close the gap.
In Holden’s case, should Holden have ever tried to stay a mass-market brand? Would rebadging cheap imports ever work for a brand promise of the ‘Australian’s car’. That’s a bit like Qantas outsourcing customer service and inflight experience to Jetstar…. Oh, wait…. When Qantas had a similar problem they launched another brand to meet the market and set about reworking the Qantas brand!
Fourthly, talk to an outside group. Get the truth. Have a brutal pursuit of truth in order to build insights to inform strategy. If Holden had done this, they might have created a real competitor to the Toyota Prado or a fierce competitor to the Hyundai Excel or Mazda 3.
Lastly, never assume that because you’ve been around for 150 years you’ll be around for another year. History says at some point you won’t.
We have a proven method of building brand integrity that de-risks out of touch executives making decisions like those at General Motors.
Please note the author is not or has not been employed or contracted by Holden. All commentary and insights provided are opinions based reading the research, talking to customers or employees, being a customer and observing the brand in the market place. Any trademarks used are for the purpose of educating others through this article.