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Lessons Holden might have learned from our worst car failure

The Leyland P76 was supposed to rescue the company - but noone bought it. Flikr/ peterhut

Lessons Holden might have learned from our worst car failure

The Leyland P76 was supposed to rescue the company - but noone bought it. Flikr/ peterhut

One of the main complaints thrown around since Holden announced it would cease manufacturing in Australia has been that it failed to make a product that the market wanted. Forty years ago, this complaint was levelled at another Australian car, the Leyland P76, described as “one of the costliest new product failures in Australian history”.

“Anything but Average” - but still a failure

In the 1960s the company Leyland was struggling as it was no longer a direct branch of the British parent organisation, Leyland Motors. Envisaging an all-Australian car as the key to bringing Leyland Australia out of its troubles, the new company launched the Leyland P76 on 26 June 1973 with great fanfare.

The result of seven years of research, planning and testing, its slogan was: “Leyland P76. Anything But Average”.

The P76 was available as a five or six seat sedan, with an overall length of 4.88 metres. The standard model had a choice of a 2.6-litre six cylinder or a 4.4 litre V8 engine, which was front-mounted and drove the rear wheels. Based on European design, it had an unusual wedge shape with a forward opening bonnet and a large boot - big enough to hold a 200-litre oil drum!

Initially, the public response with positive, with around 2000 orders taken in its first week of release and Wheels Magazine naming it 1974 Car of the Year.

However, just 15 months after the launch, Leyland was in financial crisis. The P76 was withdrawn, 800 cars were forced to be sold at bottom-of-the-market prices, and there was pressure on the Whitlam government to nationalise the company. Leyland reported a loss of over $50 million and ended up ceasing car manufacturing in Australia.

Too big, too thirsty

A number of works (including mine) have addressed the P76’s failure. Most notably was a changing market that saw a swing away from big family cars to smaller, more reliable, economic cars, particularly after the 1970s Fuel Crisis.

Holden has also been facing a market that prefers smaller cars, with the Toyota Corolla, Mazda 3, and Hyundai i30 three of the top five cars sold in Australia. However, Holden continued to concentrate on building large cars like the Commodore and Cruze.

The P76 was too big and thirsty. Flckr/Andrew Robinson

Too much competition

Leyland Australia tried to take the “Big Three” head-on in the large car market, while the car industry was very fragmented with Japanese cars gaining popularity.

The current market is also fragmented by more than 60 brands. There are growing imports from Europe as well as emerging car manufacturers like Malaysia (Proton) and China (Great Wall), plus some interest in hybrid/eco-friendly cars.

Clearly, Australians are not buying cars based on whether they are locally made, and not everyone wants a car like the Commodore.

Holden has not focussed on exporting as part of its business model, unlike Toyota, and the high Australian dollar did not make the Holden competitive. Mitsubishi and Ford had already shown that car manufacture in Australia was not profitable, which added pressure on Holden and Toyota, and others in the supply chain.

Dogged by problems

Leyland Australia also had a history of failed car releases before the P76, such as the Morris 1500 and Tasman/Kimberly. Holden has also had problems with its product, with recalls issued for Holden Cruzes for a faulty fuel hose in 2011 and brake problems in 2012.

Unions

Leyland Australia was hit hard by a series of industrial disputes, which included strikes by storeman and packers and power black-outs in NSW. Holden has had relative peace with its workforce, although it has been argued this came at the cost of wages “twice as high as in Europe and four times as high as in Asia”, making the price of the final product internationally uncompetitive and unsustainable without government handouts.

Government policy

The final factor affecting the fortunes of both companies has been an ongoing stop/go" policy approach to in the car industry by government.

In 1973, the Industries Assistance Commission (IAC) concluded that the Australian market could only support three car manufacturers. Holden made its decision after the federal government made it clear there would be no extra money for Holden - even as the Productivity Commission inquiry into automotive assistance was underway. So 40 years later, despite tariffs, tax concessions, subsidies and grants worth billions, we are down to one.

A P76 can occasionally be seen driving on the road, but it is now regarded more as an oddity. It is possible some day in the future the sight of an Australian-made Holden may be seen the same way.

One stark difference will be the cost. The P76’s failure cost Leyland $50 million dollars, but the price for Holden and the Australian people will be a lot more. This reminds me of a famous (anonymous) quote: “Every time history repeats itself, the price goes up”.