The Holden assembly line.
The Holden assembly line. GM Corp

Holden shutdown will put pressure on us, says Toyota

UPDATE: HOLDEN is not leaving because the flow of government money has dried up, according to the car marker's managing director Mike Devereux.

Fielding questions outside Holden's Elizabeth plant in Adelaide, Mr Devereux said he was contacted by General Motors management - the American owners of Holden - following his testimony to the Productivity Commission on Tuesday.

Mr Devereux said as late as Tuesday afternoon that GM was yet to make any decision on the future of Holden manufacturing in Australia, but said a review was done late in the day and he was telephoned with the news that Holden would shut down manufacturing by the end of 2017.

From 2018, the Holden brand will remain but rely on cars and parts brought in entirely from overseas.

After a hard-line stance from the Coalition Government for the past week, including Prime Minister Tony Abbott's public statement that there was "no more money for Holden" Mr Devereux would not blame the government for Holden's now-looming departure.

"No matter which way we applied the numbers, our long-term business case to make and assemble engines in this country is simply not viable," he said.

He described the high Australian dollar, cost of production and ferocious competition as "a perfect storm".

Mr Devereux said Holden would try to support the loss of its 2900 workers up to its 2017 closure.

"Nothing I can say can take the sting from this announcement," he said.

"Everyone from Holden should stand tall.

"We make cars all Australians can be truly proud of."

In a statement today, Toyota said the decision by Holden would place unprecedented pressure on its ability to build cars in Australia.

"We are saddened to learn of GM Holden's decision,'' the statement said.

"This will place unprecedented pressure on the local supplier network and our ability to build cars in Australia.

"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.

"We will continue with our transformation journey as planned.''

COMMENT: Holden shutdown was inevitable

Holden to shut down Australian production plants

HOLDEN has  announced it will cease production operations in in Australia in 2017.

General Motors released a statement today saying it would discontinue vehicle and engine manufacturing and significantly reduce its engineering operations in Australia by the end of 2017.

The company said it would "transition to a national sales company in Australia and New Zealand". 

"We are completely dedicated to strengthening our global operations while meeting the needs of our customers," GM Chairman and CEO Dan Akerson said in the statement.

"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."           

The company said as a result of its actions, about 2900 positions would be lost over the next four years. This will comprise 1600 from the Elizabeth vehicle manufacturing plant and about 1300 from Holden's Victorian workforce.

Furrther job losses will be felt in support industries.

Holden said it would continue to have a significant presence in Australia beyond 2017, comprising a national sales company, a national parts distribution centre and a global design studio.

GM Holden Chairman and Managing Director Mike Devereux said an important 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.

"We are dedicated to working with our teams, unions and the local communities, along with the federal and state governments, to support our people."

The sale and service of Holden vehicles will continue through the  network of Holden dealers across Australia and New Zealand. Warranty terms and spare parts availability will remain unchanged.

"GM remains committed to the automotive industry in Australia and New Zealand. We recognise the need for change and understand the government's point of view," Mr Devereux said.

"Moving forward, our business model will change significantly however, GM Holden will remain an integral part of its communities and an important employer both directly and through our dealers," .

Since 2001, the Australian dollar has risen from US$0.50 to as high as US$1.10 and from as low as 47 to as high as 79 on the Trade Weighted Index.

The Australian automotive industry is heavily trade exposed. The appreciation of the currency alone means that at the Australian dollar's peak, making things in Australia was 65 percent more expensive compared to just a decade earlier.