General Motors has announced that it will stop producing vehicle and engines and will scale back engineering operations in Australia by the end of 2017. Its Holden unit attributed the decision to the high cost of manufacturing in what is considered as one of the smallest but competitive markets. The announcement confirmed speculations that had been circulating the past few days.
“We are completely dedicated to strengthening our global operations while meeting the needs of our customers,” GM Chairman and chief executive Dan Akerson said in a statement. He noted that the decision reflects the “perfect storm of negative influences” the auto industry faces in Australia -- the sustained strength of the Australian dollar, high cost of production, small domestic market and “arguably the most competitive and fragmented auto market in the world.”
Australia generates annual sales of about 1.1 million new vehicles, but deliveries of locally produced vehicles have fallen to less than a quarter of total industry volumes, from almost 389,000 in 2005.Holden, which claims a 10 percent share of the Australian market, posted a loss of 153 million Australian dollars in 2012.
It has been a GM subsidiary since 1931 and also serves as a major engineering and design center for the automaker, notably for rear-wheel drive cars such as the Chevrolet SS. Japan's Mitsubishi Motors Corp. discontinued manufacturing in the country in 2008.
Ford Motor Co. said in May it would shutter its two Australian auto plants in October 2016. With GM's decision to end production, there is concern Toyota Motor Corp. will follow, prompting a collapse of the country's domestic auto industry that employs more than 40,000 workers and supports 150 suppliers. [source: GM]