GM to Stop Making Cars in Australia by 2017

General Motors/APA Holden Cruze hatchback is manufactured at a plant in Australia.

CANBERRA, Australia -- General Motors Co. (GM) said 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 Corp. (TM) 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 Co. (F), 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 Corp. 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 in a statement. 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 on Jan. 15.

GM's Australia chairman Mike Devereux said GM cars rebadged as Holdens would continue to be sold and serviced in Australia after 2017.

GM is currently selling the Australia-built Chevrolet SS in the United States.
The 6.2-liter V-8 muscle car is called the Holden VF Commodore in Australia.

"Building cars in this country is just not sustainable," Devereux told reporters.

Industry Minister Ian Macfarlane said he was "floored" when Devereux phoned and broke the news.

Macfarlane said he was disappointed that GM had made its decision before an inquiry had completed an analysis of government support of the auto industry.

Holden has received 1.8 billion Australian dollars ($1.6 billion) in federal government assistance in the past 11 years.

"The task for the industry has got measurably more difficult as a result of Holden's decision, but it is not impossible to maintain a component and car industry in Australia," Macfarlane told reporters.

Toyota said GM's decision put its own ability to make Australian cars under "unprecedented pressure."

"We will now work with our suppliers, key stakeholders and the government to determine our next steps and whether we can continue operating as the sole vehicle manufacturer in Australia," Toyota said in a statement.

The Australian Manufacturing Workers' Union, which represents most of the auto industry's workforce, predicted that Toyota would also shut its Australian plant.

"Toyota have told me that they won't be able to survive in Australia because of the lack of volume in the component industry," AMWU vehicle division secretary Dave Smith told reporters.

"This will spell the end of 50,000 automotive jobs," said Smith, blaming a lack of federal government support for GM's decision.

Acting Prime Minister Warren Truss said the number of cars manufactured in Australia had declined by one third in only six years. Automakers in Australia produced about 178,000 cars last year, according to the International Organization of Motor Vehicle Manufacturers.

Truss said there more than 50 car models available to a population of only 23 million people.

"While Australians say they want locally manufactured cars ... the reality is they don't buy them," he said.

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No more Kangaroo Motors?

December 11 2013 at 8:42 PM Report abuse rate up rate down Reply

Dear Gentle Reader dweebuster,
Please allow me to provide an example of good government.
After a 1832 pandemic cholera outbreak in New York, government commissioned a group of engineers to find a solution for a better drinking water system. They included Major David Douglass, engineering professor at the West Point Military Academy and John B. Jarvis. Construction of the resulting Croton aqueduct was completed in 1842, and is part of one of the finest municipal drinking water systems in the world. That is not the work of goons, that is creative solution. Are you suggesting continued cholera outbreaks was preferable?
I have little doubt the few displaced farmers from the Croton River Valley (which became the Croton Reservoir of the millions) were happy, but they were well compensated.
I often wonder if government should commission a panel of application "education engineers", instead of research Phds arguing about it. Engineers, who also have training in humanities and "civics". Clearly, "civics" has been neglected for far too long.

December 11 2013 at 1:42 PM Report abuse rate up rate down Reply

Trans-Pacific Partnership (TPP) = "international corporate secret agreement" bullying to sign.
Google: "TPP secret" extremely urgent!

After that,
Big Deal! Where there is change, there is opportunity. An Australian company can be created to produce a modern ONE MODEL "Everyman's Car" (original "Beetle" concept) for 50,000,000 consumers. The Australian government should mandate high reliability, high mileage, modularity replacement parts availability for 30 years, no electronics in the vehicle, a roof that accepts detachable honest roof-racks, a tow hitch for occasionally towing a small trailer or small boat.
44 mpg Honda Civics were able to all that in the '70s/'80s.

Henry Ford said: "You can have any color you want, as long as its black."
When he said that, we all had jobs and we all had futures.

Australians need to make a choice. ONE MODEL without stuff that doesn't belong in a vehicle, or pressing their noses against the glass like kids without jobs, without an economy.
People think cars are "bling" displaying their adolescent "uniqueness". No, 50 different models all look basically the same. It is "vanity" marketing, to separate the consumer from their money with high expenses. Want to show me your uniqueness? Then, show me your beautiful smile. The natural selection coefficient "s" of the species is about the smile, not a 2000lb lump of metal and plastic.

In the '90s the Japanese motorcycle manufacturers (CAD amok) marketed 200+ new models of motorcycles. The Japanese government assembled the manufacturers together, and told them "this madness has got to stop"!
Its bad for manufacturers, its bad for you.
Give me a reliable vehicle, not a Faberge egg on the dealership's lift.

December 11 2013 at 11:57 AM Report abuse -1 rate up rate down Reply

Easy solution, just use the Egyptian auto plan.
No cars not made in Australia are allowed into the Country.
Works in Egypt and can work in Australia: too.
Basically, does Australia want jobs or cheap imported cars?
Which is more important?

December 11 2013 at 10:04 AM Report abuse rate up rate down Reply

Back in the 50's and 60's the auto industry flourished! They not only used primarily American and Canadian workers, but used American suppliers as well to build the cars. When Bush agreed to give the GM bailout, it should have been stipulated that if they got the money they would have to go back to what they did back then! This would have been a boost to the stagnant economy that obvoiusly this president has no idea how to restart! Imagine, Detroit not being bankrupt, start up many new businesses, and people going back to work!

December 11 2013 at 9:35 AM Report abuse rate up rate down Reply

Moving to china?

December 11 2013 at 9:11 AM Report abuse rate up rate down Reply
Phil Collins

Soon we will all be driving to work, school, church and the mall in Plastic Lemons made in Third World Countries. - When America shipped all of it's skilled Labor Jobs over seas Fast Food became the numbe one job for young people coming out of High School and not going to College. - Anybody for Pizza <> that is a Delivery Job !

December 11 2013 at 8:45 AM Report abuse +2 rate up rate down Reply

For those who continue to criticize the Bush and Obama Administrations' decisions (although they never acknowledge that the original bailout was by Bush) to bail out GM, think about the economic disaster that would have occurred had GM been allowed to fail here. 50,000 jobs in Australia and virtually the entire car parts industry is gone---that would have been multiplied hundreds of times over here, where the company is much bigger, the dealerships also would have gone out of business and the auto parts and repair businesses that depended on GM would have failed as well. In retrospect, $10 billion (the final cost of the bailout) was a small price to pay.

December 11 2013 at 8:38 AM Report abuse +2 rate up rate down Reply

So, then it is probably a good thing that the Obama administration chose to allow tax payers to take the $10.5 Billion stimulus loss now...before GM stock tanks further?

December 11 2013 at 8:34 AM Report abuse rate up rate down Reply
1 reply to cshae89546's comment

GM stock tanked to zero when they filed bankruptcy

December 11 2013 at 9:12 AM Report abuse rate up rate down Reply

must have gotten another better deal in china

December 11 2013 at 7:57 AM Report abuse rate up rate down Reply