Australian auto industry in crisis: GM to halt Holden production in 2017 image

The US automaker has announced it would stop making cars in Australia by 2017 due to high costs and a cripplingly strong currency – fueling fears the entire auto industry is at risk.

The decision by the world’s second-largest automaker to close its Holden plants in South Australia and Victoria states is the latest blow to Australia’s manufacturing industry and the auto sector in particular.

“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 at GM’s car plant in Adelaide on Wednesday.

The decision to halt domestic production of Holden cars, long a source of national pride, will pile more pressure on Prime Minister Tony Abbott’s conservative government, which is seeking to manage a slowdown in the $1.5 trillion economy as a decade-long mining investment boom slows.

GM Chairman and CEO Dan Akerson said the decision reflected a “perfect storm” of negative influences facing the Australian automotive industry including the sustained strength of the Australian dollar, high cost of production, and a small, fragmented and highly competitive domestic market.

We should also remember that May, Ford Motor Co said it would shut its two Australian auto plants in October 2016, blaming similar factors.

Via Reuters