The future of the Australian car industry is now in doubt with Holden’s decision to join Ford in pulling out of car making.
Holden will cease building cars in Australia by the end of 2017, throwing the future of the national auto industry into doubt.
Ford Australia is due to stop making cars in 2016, and there are concerns that Toyota will pull out as well. Mitsubishi closed its Australian factories in 2008.
The car component industry is expected to be hard hit by Holden’s decision.
Up to 2900 employees at Elizabeth in South Australia and in Melbourne will be affected by the decision made overnight by Holden’s parent company, the US car maker General Motors.
An Australian Manufacturing Workers Union spokesman says Holden’s withdrawal will be devastating and lead to 50,000 job losses and a $21 billion hole punched in the economy.
General Motors announced on Wednesday it would end car and engine manufacturing and transition to a national sales company in Australia and New Zealand.
Dan Akerson, chairman and CEO of GM, said the strong Australian dollar was one of the factors in the decision.
“The decision to end manufacturing in Australia reflects the perfect storm of negative influences the automotive industry faces in the country, including 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,” he said.
Australian chairman Mike Devereux said the priority over the next four years would be to ensure the best possible transition for workers in South Australia and Victoria.
“This has been a difficult decision, given Holden’s long and proud history of building vehicles in Australia,” Mr Devereux said in the statement.
Mr Devereux said GM was committed to working with unions and local communities, along with the federal and state governments, to support its people.
He said the sale and service of Holden vehicles would not be affected, and GM remained committed to the automotive industry in Australia and New Zealand.
Last week, Prime Minister Tony Abbott – who is returning from the Nelson Mandela memorial service in South Africa – had rejected spending more public money to keep Holden operating in Australia.
Mr Abbott said the government would not offer anything beyond what was promised at the September election – a total of $500 million in car industry assistance to 2016/17.
The company on Tuesday told a Productivity Commission inquiry into the auto industry it had not decided whether to continue manufacturing cars in Australia.
Federal parliament erupted into angry exchanges following the announcement, with the opposition accusing the Abbott government of getting what it wanted.
Victoria Premier Denis Napthine said the state government had been told the decision was irreversible.
“This is a very, very sad day for Australia and Victoria,” he told parliament.
“We have been advised that it is an irrevocable decision.”
Mr Devereux will hold a press conference in Adelaide 3.30pm (AEDT).