Toyota to stop building cars in Australia in 2017

Article by Anita Panait, on February 12, 2014

Toyota Motor Corp. will halt its carmaking operations in Australia in 2017, following announcements by Ford Motor Co. and General Motors Co. of plans to pull out from the country. Toyota, which has been in Australia since 1963 and employs around 2,500 manufacturing jobs, cited high manufacturing costs, a strong Australian dollar and low economies of scale for its decision to pull out.

The carmaker’s decision effectively marks the end of an Australian car industry as local consumers opt for cheaper imports no thanks to the small scale of local sites and an Australian dollar that surged almost 50 percent against the US dollar from 2009 to 2012. Ford disclosed in May that it would stop output in October 2016, while GM, though its Holden unit, would halt production in 2017.

"Once Ford and Holden went, it was always going to be hard for the last one to survive," said Stephen Walters, JPMorgan Chase & Co.'s chief economist in Australia. He added that there will be “spillover effects” in terms of employment lost in the car industry itself and related industries.

The Australian auto industry, including parts makers who supply Toyota, Ford and GM, employed 50,370 people as of February 2013, according to government data. Toyota is currently the biggest auto exporter in Australia, shipping about 73 percent of the 101,424 cars built in 2012, according to a November submission to a government inquiry on the future of the industry.

"We did everything that we could to transform our business, but the reality is that there are too many factors beyond our control that make it unviable to build cars in Australia," Toyota Australia President Max Yasuda said in the statement. He remarked that their manufacturing operations in the country have continued to be loss-making despite their best efforts.

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