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Auto Industry

General Motors prepares to stop production in Australia

US carmaker General Motors has said it will stop producing vehicles in Australia by 2017. The automotive giant cited the strong Australian dollar as one of the reasons for the pullout, which will cost thousands of jobs.

The decision by the world's second-largest automaker to close its Holden subsidiaries within the next couple of years came as yet another blow to Australia's manufacturing industry and the car sector in particular.

GM said high costs and a cripplingly strong currency left it with no other option. "No matter which way we apply the numbers, our long-term business case to make and assemble cars in this country is simply not viable," General Manager Mike Devereux told reporters in Adelaide.

GM Chairman and CEO Dan Akerson added that plans for a withdrawal by 2017 were prompted by a rather fragmented and highly competitive domestic market.

Toyota to follow suit?

GM with fresh investment in Opel

In May of this year, rival Ford said it would shut its two Australian car plants in October 2016, blaming similar factors.

And widespread concerns continue that GM's exit may be followed by the then sole remaining producer, Toyota, threatening scores of parts and component suppliers and more than 40,000 associated jobs.

GM's pullout plans are bound to put even more pressure on Australian Prime Minister Tony Abbott's conservative government, which has been trying to reverse a slowdown of the domestic economy as a decade-long mining investment boom grinds to a halt.

The news comes shortly after GM announced that a 33-year company veteran, Mary Barra, will be replacing Akerson as CEO next month.

Australia has annual sales of around 1.1 million new vehicles, but less than a quarter are produced locally.

hg/tj (AFP, Reuters)

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