General Motors said on Wednesday it will stop making cars and engines in Australia by the end of 2017, with nearly 2,900 jobs to be lost, because of high production costs and competition.
The decision could spell the end of car manufacturing in Australia as the industry will be too small for supporting businesses such as parts makers to remain economic. Toyota Motor announced it is reassessing its future in Australia. A union said 50,000 jobs in the auto industry are in jeopardy.
GM’s Australian subsidiary Holden once dominated Australian auto sales, but lost market share to imported cars. Ford Motor, once Holden’s major rival in Australia, announced in May that it was ending production in the country in 2016. Toyota is the only other auto manufacturer in Australia.
Australia had four car manufacturers before Mitsubishi Motors shut its doors in 2008.
GM’s announcement has been anticipated for months. The Australian government has been under mounting pressure to offer increased subsidies to the Detroit-based company to keep it manufacturing in Australia for the sake of the auto parts industry.
The decision reflected the “perfect storm of negative influences” that Australia’s auto industry faces, GM’s chief executive Dan Akerson said. Describing Australia as “arguably the most competitive and fragmented auto market in the world”, he also blamed the sustained strength of the Australian dollar, high costs of production, and a small population. Holden, which has manufactured cars in Australia for 65 years, would become a sales company, he said.
The announcement was made the same day GM revealed that Akerson will be replaced by Mary Barra.
GM’s Australia chairman Mike Devereux said GM cars rebadged as Holdens would continue to be sold and serviced in Australia after 2017.