Australian election to decide fate of GM and Toyota factories image

The September 7 election in Australia is of major importance for car plants run by General Motors Co. and Toyota Motor Corp. as the government committed to subsidies faces the opposition vowing to scale back support.

GM’s manufacturing unit in Australia, Holden, is waiting on the result before deciding on investments in the country beyond 2016, as Prime Minister Kevin Rudd styles the contest as a vote on the industry’s future.

Rudd’s government has set aside A$5.4 billion ($4.8 billion) for the domestic car industry until 2020 and pledged another A$700 million during the campaign. Facing a deteriorating budget position, opposition leader Tony Abbott, the opinion poll favorite, wants to cut A$500 million from the subsidies by 2015.

Cars made in Australia slumped to 13% of domestic sales in 2012 from 80 % in 1984, according to data from Ford and the Federal Chamber of Automotive Industries. The value of Australia’s car exports in 2012 was 29% below the average of the previous 10 years, government data show.

The local manufacturing operations of GM and Toyota had combined operating earnings of A$492 million over the five years to 2010, according to a 2012 report by researcher Ibisworld Inc. GM, Ford and Toyota have been hit by a strong Australian dollar that’s made exports uncompetitive and brought in more imports.

Via Bloomberg