Case background

GM Holden Ltd is a foreign-owned unlisted public company, deriving revenue from the import, marketing, sale and servicing of motor vehicles, engine components and related parts and accessories. The company employs approximately 1,010 people, operates in Australia, and is administered by its head office in Port Melbourne.

2020 - February: The company's parent entity General Motors announced that it would exit the Australian market by 2021, where it will wind up its Holden brand and close its sales, engineering and design operations in the country.

2019 - April: GM Holden's parent, General Motors launced its Holden Financial Services business in Australia.

2019 - January: Under the Modern Slavery Act 2018 (Cth), GM Holden will be required to submit a report by the 31st of December 2020, detailing their actions taken to address to the risk of modern slavery in their operations and supply chains.

2017 - October: GM Holden commenced the closure of its manufacturing plant in Adelaide.

2013 - December: GM Holden announced it would cease manufacturing in Australia and transition into a selling organisation, importing all vehicles by the end of 2017. The company will retain a global design studio in Australia.

2010 - GM Holden opened a new small-car production plant in Adelaide.

2008 - Holden agreed to produce a new four-cylinder vehicle with co-investment from the Rudd Labor government's $1.3 billion green car fund. The deal was expected to create 1200 jobs.

2002 - GM Holden gained a 42.1% stake in the Australian automotive business of South Korean industrial giant Daewoo as part of a consortium of investors. Holden secured the Australian distribution of Daewoo vehicles as part of the deal.

1948 - General Motors - Holden's produced Australia's first locally manufactured car, the Holden 48/215, or FX.

1931 - General Motors Australia, the Australian subsidiary of US motor company General Motors and one of Holden and Frost's best sources of business, purchased Holden Motor Body Builders, forming General Motors - Holden.

1856 - The Holden brand was first used by leatherworker James Alexander Holden, who established his saddlery business in Adelaide during this year.

Financial assumptions:

In 2013, the manufacturing capacity is 500/day, the fixed cost is 13000/car, the material and handling cost per car is 5000/car, estimated sales price is 21000/car.

In 2019, approximately 200 people are remaining in the business to support a network of authorised Holden Service Outlets across Australia to service and repair vehicles for Holden customers, the salary per person per year is $51266. And the facility or other fixed cost would be $700/person.

Holdens analysis, based on data provided by dealers, showed average profit to be $351 per vehicle over the period 2017-2019. Holdens compensation offers of $1,500 per vehicle is over four times that amount. In 2019, on average Holdens Australian dealers made a loss of $600 on each new car sale. With the Transition Support Program (TSP) offering $1,500 cash per lost sale through to the end of 2022 this represents an increased payout of $2,100 per vehicle sale, based on 2019 sales and locked in for 2.5 years.

1. Describe fixed cost, variable cost, marginal cost, sunk cost and opportunity cost for the car manufacturing plant. Please find thesolution to how many cars that holden had to produce each dayin 2013 to breakeven? Prepare a breakeven chart.

2. Draw a life cycle diagram for the small-car production plant that GM Holden Ltd opened in 2010. Can you describe the environmental cost of final disposal?

3. How many cars did GM Holden Ltd need to sell daily in 2019?